Asian Currency Crisis Research Paper Example | Topics and Well Written Essays - 500 words

Asian Currency Crisis - Research Paper Example Credit was made available from abroad cheaply and in large quantities because of the implicit government guarantees (Hale, 2011, pg. 2) The Asian Financial Crisis was also a set back from its artificial growth from the 1980’s until July of 1997 where its growth was fueled primarily by â€Å"hot money† that expects high profit on a short term. This â€Å"hot money† kept pouring in South East Asia (around half of all the investments that went in the developing countries) as a result of high interest rate which made investing in that part of the world attractive. As a result, asset prices rose with a Gross Domestic Product (GDP) registering from 8-12 %. While this was initially laudable, this was not sustained as real total factor productivity growth, or productivity output, especially in Thailand is not commensurate to its financial growth. Such, this continuous capital inflow into Thailand formed into a bubble fueled by â€Å"hot money† and not by total pro ductivity output. And as the bubble furtherly developed, it required more and more â€Å"hot money† needed to sustain it until it burst resulting to the Asian Financial Crisis of July, 1997.