It may be misleading to describe the economic crises that swept through East Asia from the summer of 1997 as merely turmoil in currency or financial markets since that could belie the fundamental weaknesses beneath those nations' rapid growth in the early 1990s.
"Since the late 1980s, many of these economies had been enjoying a boom in foreign capital inflows," said Sauwalak Kittiprapas, of the Thailand Development Research Institute Foundation. "In Thailand, high profit margins in stocks, high interest rates and relatively low risks, due largely to a U.S. dollar-pegged currency, attracted foreign capital.
"A reversal of this flow occurred when the baht was floated, with massive amounts of capital fleeing the country in the second half of 1997, culminating in a national crisis that soon spread to other economies in the region," she said.