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As I mentioned at the top of this page, I will discuss about the Asian Financial Crisis in 1977. So some of you are wondering how it is relevant to this picture. Hopefully that I will not teach you how to cook the most delicious Thai's food, Tom Yam Kung.
Asian Financial Crisis, as known as the "Asian Contagion", was started due to the collapse of Thai Baht.
How did it start ?
In July 1997, Thai government decided to use the floating exchange rate instead of using the pegged exchange rate or fixed exchange rate to the U.S. dollar because there was a financial overextension. Following this, the value of Thai baht was devalue immediately. For instance, on 1 July 1997, Thai people paid 25 Baht to get US 1 but after the declaration of the government, on 2 July 1997, they had to pay 57 Baht to receive US 1.
Since the begin of this crisis take place in Thailand, it is called Tom Yam Kung Crisis.
Here is the meaning of the contagion
Next post I will talk about what is the financial situation in Thailand before Asian Financial Crisis.