Currency Crises in Asia and Mexico Analytical Essay by Top Papers

This document discusses currency crises and utilizes the Asian financial crisis of 1997 to 1998 and the Mexican peso crisis of 1994 as illustrative examples. The writer explains that the Asian financial crisis began in Thailand with the sudden devaluation of the Thai baht but is unique in that it spread to many other Asian markets. Therefore it is useful to examine this example from the perspective of its development and impact on a single market and the South Korean economy is used as an example. The writer discusses that the Mexican peso crisis of 1994 was isolated to that market and was triggered by the sudden devaluation of the peso and made worse by the fact that Mexico had established little of the necessary safeguards and reforms to stabilize the currency during its adjustment period following devaluation. The writer concludes that in both of these examples, the currency crises were precipitated by sudden capital flights out of the markets in question which exacerbated the devaluation of the currencies.