BANGLADESH INSTITUTE OF INTERNATIONAL AND STRATEGIC STUDIES

INDICATORS OF CURRENCY CRISIS: THE EAST ASIAN EXPERIENCE

Author: Rafal Alam Gobillda Chakraborty Haripada Bhallacharjee

DOI Link: https://www.doi.org/ BIISSj1999v20n2a2

ABSTRACT

The present decade experienced three major currency crashes in three regions -the ERM crisis in Europe in 1992. the Mexican crisis in 1994 and the East Asian currency crash in 1997. The paper tried to lest which of the indicators of the three currency crashes of this decade explain the currency crash of East Asia better. Probit analysis has been used for two countries -Korea and Thailand. The result of the analysis shows that the growth rate of government debt. current account balance as a percentage of GDP. change in foreign exchange reserve and annual growth rate of the Japanese economy significantly explain the currency crash of Korea. The pooled regression with the data of both the countries showed that the growth rale of government debt. change in foreign exchange reserve. real interest rate. annual growth rate of Korea and Thailand and the annual growth rate of the Japanese economy explain the currency crashes of both the countries significantly. Some lessons for Bangladesh are also drawn.