Thailand's Currency Crisis: Effects
With this currency crisis, not only were Thai citizens affected, but also countries beyond Thailand's borders. Since "Thailand's Currency Crisis" is nearly synonymous with "the Asian crisis", it's clear that many of the same things happened in countries near Thailand once the Thai crisis had triggered other similar crises.
For Thai citizens, the currency crisis meant that foreign goods were suddenly more expensive. Imports dropped radically. But the sector most affected by the currency crisis was not the public sector. The biggest impact was in the financial sectors. In the case of foreign loans, if the loans had been given prior to the crisis, the borrowers were having trouble paying interest on the loans, let alone pay back the investor. Also, if a loan had been taken from a foreign source and then re-loaned out to the Thai public, with the dramatic fall in currency value, the return on the Thai loans didn't match the value of the original loan. If loans weren't in existence, it was hard to get foreign loans, since the foreign investors didn't trust Thailand's ability to repay the loan at a later date. The biggest (and first) helping hand was the International Monetary Fund (IMF), which arranged for an emergency rescue package for Thailand, totalling some $18 billion.
Regional Effects
The first countries to be affected by Thailand's crisis were the those countries in the same trading network as Thailand. The hardest hit were Indonesia and Korea. Other Southeast Asian countries were affected, but these two truly crashed in a manner similar to Thailand. From southeast Asia, the currency crises spread into Russia. The IMF loaned out a total sum of $184 billion to the countries affected in this region.
Effects Beyond Asia
During 1998, the Thai crisis had dragged one third of the globe into recession. After Russia's currency dropped, Latin America was the next largest area affected. Developing countries were hit hard, since, because of this crisis, investors in global markets pulled out, affecting the global economy. This was unfairly affected developing countries that had not previously been part of the Asia crisis.
First World countries were also affected by this currency crisis, mainly due to the loss of worldwide markets. Demand for imported goods in over a third of the globe diminished to nearly nothing. The countries hit by the crisis were no longer capable of importing foreign goods.
