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Asian Financial Crisis

Financial crisis in East and Southeast Asia

Asian Financial Crisis

The 1997 Asian financial crisis originated in Thailand, spreading to other countries. Recovery in 1998–1999 was rapid, with fears of a global meltdown subsiding. The crisis led to currency devaluation, stock market collapses, and high levels of foreign debt in affected countries. Efforts by the IMF and individual countries helped stabilize the situation, but Indonesia faced domestic turmoil resulting in President Suharto stepping down. By 1999, signs of economic recovery were visible in East and Southeast Asia.

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Global Financial Crisis Asian Development Bank Savings and Loan Crisis European Debt Crisis Silicon Valley Bank Collapse Goldman Sachs Citigroup Great Depression Bank of Japan Alan Greenspan

Timeline

Asian Financial Crisis of 1997

A severe financial crisis that affected many Asian countries, leading to currency devaluations, stock market crashes, and overall economic downturn. It started in Thailand and quickly spread to other nations in the region.

Floating of the Thai baht and currency devaluation

The Thai baht is floated, leading to a 15% devaluation in onshore markets and a 20% devaluation in offshore markets. This triggers pressure on the Philippine peso, Malaysian ringgit, and Indonesian rupiah.

Thailand and IMF agree on financial stabilisation package

Thailand and the IMF reach an agreement on a US$17 billion financial stabilisation package, marking a crucial step in addressing the economic crisis.

Indonesia seeks IMF and World Bank help

Indonesia asks for assistance from the IMF and World Bank after the rupiah falls more than 30% in two months, despite interventions by the country's central bank to support the currency. This marks the beginning of Indonesia's struggle during the Asian Financial Crisis.

Dow Jones Industrial Average plummets 554 points

Rattled by Asia's currency crisis, the Dow Jones Industrial Average experiences its biggest point loss ever, plummeting 554 points. This event reflects the contagious nature of the Asian Financial Crisis on global financial markets.

IMF agrees to a loan package for Indonesia

The IMF agrees to a loan package for Indonesia, eventually reaching $40 billion, in exchange for the closure of financially insolvent banks and other wide-ranging reforms. This marks a significant intervention by the IMF during the Asian Financial Crisis.

IMF Standby Credit for Indonesia

IMF approves a standby credit for Indonesia of US$10.1 billion, with US$3 billion made available immediately to address the financial crisis.

Korea Abandons Defence of the Won

Korea abandons the defence of the won, signaling a significant development in the Asian financial crisis.

Korea Requests IMF Assistance

Korea officially requests IMF assistance in response to the escalating financial crisis.

IMF approves $57 billion bailout package to South Korea

The IMF approves a historic $57 billion bailout package to South Korea, in response to President Bill Clinton's call for 'tough medicine' for the country's economic situation.

Downgrade of Korea's sovereign rating

Rating agencies downgraded Korea's sovereign rating to speculative grade, causing a sharp decline in the value of the won.

Seoul wins early payment of $10 billion in loans from IMF and G-7

Seoul secures an early payment of $10 billion in loans from the IMF and Group of Seven (G-7) to prevent a default on its short-term loan debts. In exchange, South Korea agrees to expedite financial reforms and open its domestic financial markets.

Introduction of Indonesian budget

The Indonesian budget introduced on this day was poorly received by financial markets, contributing to the ongoing financial crisis.

Joseph Stiglitz questions the Washington Consensus

In a speech given in Helsinki, Finland, chief economist of the World Bank, Joseph Stiglitz, breaks with orthodoxy and questions the assumptions and effects of the 'Washington Consensus.'

South Korea's short-term debt rollover and Indonesian rupiah nose-dive

International creditors agree to a 90-day rollover of South Korea's short-term debt. The Indonesian rupiah nose-dives to an all-time low after Indonesian President Suharto unveils his state budget plan, leading to further economic instability.

IMF pressures Suharto to postpone major government-subsidized projects

Pressured by the IMF to take strong measures against Indonesia's ongoing economic decline, Suharto postpones 15 major government-subsidized projects, some linked to members of the Suharto family, to help cut expenditures and foreign debt.

Suharto signs new loan deal with IMF

Suharto signs a new loan deal with the IMF agreeing to eliminate the country's monopolies and state subsidies. This leads to a significant increase in prices for basic food staples by as much as 80% in Indonesia. The signing follows a week of the rupiah's free-fall, prompting waves of panic buying.

Indonesia and IMF reach third bailout pact

Indonesia and the IMF reach a third pact in six months for a bailout, with concessions made by both sides, marking a turning point in the Asian Financial Crisis.

Suharto resigns

Suharto resigns after 32 years in power, marking a significant turning point in Indonesian politics and the Asian Financial Crisis.

Russian Financial Crisis

Russia's financial system is stretched to the breaking point as panic-stricken stock and bond markets continue to plunge, forcing the central bank to triple interest rates to 150% to avert a collapse of the ruble.

Russia's Stock Market Crash

Russia's stock market crashes and Moscow's cash reserves dwindle to $14 billion amid unsuccessful attempts to prop up the ruble and pay off burgeoning debts. President Clinton pledges support for Yeltsin.

Yen's Fall and US Intervention

The yen's fall to levels near 144 to the dollar rattles Wall Street, prompting the US Treasury and Federal Reserve to intervene to prop up the yen. Japan and the US spend some $6 billion to buy yen in order to strengthen it. Clinton calls on Tokyo to quickly resolve its banking problems and stimulate the economy.

IMF Agreement with Indonesia

Indonesia and the IMF announce a fourth agreement to rescue an economy quickly sinking into chaos. The IMF agrees to restore subsidies for food and fuel and provide another $4 billion to $6 billion for basic necessities.

IMF announces $23 billion emergency loans for Russia

The IMF's announcement of a $23 billion emergency loan package for Russia, along with the international lender's use of an emergency line of credit, leads to a significant surge in Russian stocks and bonds, indicating the impact of international financial support on the Russian economy.

IMF approves US$1 billion payment to Indonesia

The International Monetary Fund (IMF) approves a US$1 billion payment to Indonesia and promises another US$6 billion, indicating international efforts to stabilize the Indonesian economy during the Asian Financial Crisis.

Wall Street reacts to deepening crisis with Dow plunging 300 points

The significant plunge of the Dow by 300 points in response to the deepening crisis reflects the global financial repercussions of the Asian Financial Crisis, indicating the interconnectedness of the international markets.

Russian market collapses

The Russian market collapses and trading on the stock market is temporarily suspended, causing world markets to be rocked by fears of a financial meltdown in Asia and Russia. This event contributes to the deepening of the Asian Financial Crisis.

Russia announces devaluation of the ruble and moratorium on foreign debt repayment

Russia announces a devaluation of the ruble and a 90-day moratorium on foreign debt repayment, triggering panic in Moscow as Russians line up to buy dollars. This leads to Western leaders denouncing the Russian default and causing ripple effects in Latin American stock and bond markets.

Russia falls into default

Russia fails to pay its debt on GKO or treasury bills, officially falling into default. The IMF and Group of Seven (G-7) say they won't provide additional loans to Russia until it meets existing promises. This event marks a significant escalation of the Asian Financial Crisis.

Russia's economic crisis shakes world markets

Russia's economic crisis shakes world markets, bulldozing stocks and bonds in Latin America and reverberating through the US and Europe. Russia's Duma calls for Yeltsin's resignation, and investors pile into US Treasury bonds as a safe haven from the storm, causing yields to drop to record lows.

IMF Executive Board approves extended funding arrangement for Indonesia

The IMF Executive Board approves an extended funding arrangement for Indonesia, demonstrating continued international support and efforts to stabilize the Indonesian economy during the Asian Financial Crisis.

Wall Street Plunge

After weeks of decline, Wall Street is overwhelmed by the turmoil in Russia and world markets, leading to the Dow Industrial average plunging 512 points, the second-worst point loss in the Dow's history.

Russia's Political and Economic Turmoil

Russia's Duma rejects Prime Minister-designate Chernomyrdin, leading to the resignation of the central bank chairman and deepening the country's political and economic turmoil. Russian investors and lenders estimate their losses at $100 billion, while the Dow surges 381 points after Greenspan suggests that policy makers are considering an interest cut.

IMF's Announcement for Latin American Markets

The IMF announces that the debacle in Latin American markets is 'an overreaction to Russian events' and that it is ready to lend Latin American countries, using an emergency line of credit. Investors flee Brazil, drawing out more than $2 billion a day despite an interest rate rise to 50% by the Central Bank.

Bailout of Long Term Capital Management

A consortium of leading US financial institutions provides a $3.5 billion bailout to Long Term Capital Management, one of the largest US hedge funds, to prevent a collapse that could worsen the panic in the financial markets.

Brazil's President Fernando Cardoso announces austerity plan

Brazil's President Fernando Cardoso announces an austerity plan of $80 billion in tax increases and spending cuts over three years to secure an IMF assistance package, aiming to stabilize the country's economy.

IMF, World Bank, and leading industrial nations announce rescue package for Brazil

The IMF, World Bank, and leading industrial nations announce a $41.5 billion rescue package for Brazil, reflecting the global effort to stabilize Brazil's economy amidst the Asian Financial Crisis.

World Bank projects global growth reduction

The World Bank projects that the crisis has cut world growth in half, to around 2%, and warns of a potential global recession in 1999 if Japan does not reverse the decline of its economy, highlighting the far-reaching impact of the Asian Financial Crisis.

IMF Approves Increase in Emergency Loan Package for Indonesia

The IMF approves a $1 billion increase in its emergency loan package for Indonesia. The fund also approves the release of a $460 million installment that it had held back due to Indonesia's delay in closing down insolvent banks.

Dow Jones Industrial Average Closes Above 10,000

The Dow Jones Industrial Average closes above the 10,000 level for the first time in its history.

Dow Jones Industrial Tops 11,000

The Dow Jones Industrial tops 11,000.

End of the Timeline
Asian Financial Crisis

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