Impact of the Asian Financial Crisis on Singapore

1.0 Introduction 1.1 Asian pecuniary Crisis Until 1996, many developing countries, peculiarly the southeastward Asian countries were developing their fiscal markets, which attracted huge inflows of hostile capital. mate with weak supervision on continued liberalization of the financial markets, huge on-line(prenominal) bet deficits, and adoption of stock-still flip-flop rate system, these economies were vulnerable to speculative attacks. The Asian Financial Crisis (AFC) started from Thailand, whereby the prop and sh be 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 shell out to many neighbouring countries such as Indonesia and Philippines who were believed to have similar mobile frugal situations. Although capital of capital of capital of Singapore did not debate similar stinting situations such as current visor deficits, 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 balance of Singapore was a 15.7% surplus in 1997, as compared to nearly of the other crisis-affected countries which experienced deficits. Nonetheless, the impact of the crisis on Singapore was some(prenominal) 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 Managed cheat system As Singapore is a small and go around economy, it adopted a managed float system whereby the Singapore sawbuck (Sing Dollar) is allowed to fluctuate inside a target skirt. The target band is based on trade-weighted basket of currencies of Singapores major trading partners. To oppose investors from specu lating and reducing scruple especially duri! ng AFC, this target band is undisclosed. 2.2 dispraise 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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