Currency Crises

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LINDSEY'S CURRENCY CRISIS.DOC:

Currency crisis:

Key terms:
-appreciation
-depreciation
-currency speculation

How people estimate currency:
-differences in inflation rates
-deviations from purchasing powers
-large account imbalances
-stress on exchange rate

Floating vs. Fixed exchange rate:
(with a fixed exchange rate economy is not flexible and will collapse easily)
Speculatatice attack (aka currency crisis)

2 possible reasons for currency crisis:
a. loss of reserves
b. loss of public patience

SOME economists argue that currency crisis are "self-fufilling" (ie, people cause them due to their withdrawl of funds)

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What is a currency crisis?

• "currency crises" are usually attacks on the domestic currency that end with a large fall in its value.
• As opposed to: "banking crises" refer to bank runs or other events that lead to closure, merger, takeover, or large-scale assistance by the government to financial institutions.
• One or both can happen at once.

• What are the effects? (Ex: Thailand's Currency Crisis and Argentina's Currency Crisis)
• How is a currency crisis dealt with? (Ex: Thailand's Monetary Policy and Argentina's Monetary Policy)
• What are the global effects? (i.e. ripple effect, cause-and-effect chains)

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Home Page | About Currency Crises Thailand's Currency Crisis | Thailand's Currency Crisis: Effects | Thailand's Currency Crisis: Solutions Argentina's Currency Crisis | Argentina's Currency Crisis: Effects | Argentina's Currency Crisis: Solutions Currency Crises: Works Cited

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Lindsey, Rachel, Marie, Jason, Sayo

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