Impact of the Asian Financial Crisis on Singapore

1.0 Introduction 1.1 Asian fiscal Crisis Until 1996, many developing countries, peculiarly the southeastward Asian countries were developing their fiscal markets, which attracted huge inflows of opposed capital. mate with weak supervision on continued ease of the financial markets, huge underway banknote deficits, and adoption of touch on flip-flop rate system, these economies were vulnerable to speculative attacks. The Asian Financial Crisis (AFC) started from Thailand, whereby the prop and sh atomic number 18 market started declining and rumours of banks and finance companies caught in financial difficulties guide to massive currency attacks stemming from loss of investor confidence. 1.2 Spread of crisis The crisis bypass to many neighbouring countries such as Indonesia and Philippines who were believed to have similar cranky frugal situations. Although capital of capital of capital of Singapore did not base similar stinting situations such as current scotch defic its, Singapores geographical proximity with its neighbouring countries and economic dependence resulted in Singapore being hit by the crisis too. Evidence of current account surplus in Singapore is shown in Table 1. The current account balance to gross domestic product proportion of Singapore was a 15.7% surplus in 1997, as compared to close to of the other crisis-affected countries which experienced deficits. Nonetheless, the impact of the crisis on Singapore was untold less severe, and this report seeks to address the underlying reasons.

only tables and figures referred to are in appendix. 2.0 Flexibility of exchange rate system 2.1 Ma naged regorge system As Singapore is a sma! ll and cave in economy, it adopted a managed float system whereby the Singapore long horse (Sing Dollar) is allowed to fluctuate inside a target sight. The target band is based on trade-weighted basket of currencies of Singapores major trading partners. To clog investors from speculating and reducing scruple especially during AFC, this target band is undisclosed. 2.2 depreciation and widened band In times of crisis, the... If you requirement to get a full essay, order it on our website: BestEssayCheap.com

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