1997 Aslan llnanclal Crlsls

!ubll !aln
8oll no l27
1erm aper
lnLernaLlonal llnance









Introduct|on
1he Aslan flnanclal crlsls was a perlod of flnanclal crlsls LhaL grlpped much of Asla beglnnlng ln
!uly 1997 and ralsed fears of a worldwlde economlc melLdown due Lo flnanclal conLaglon
1he crlsls sLarLed ln 1halland wlLh Lhe flnanclal collapse of Lhe 1hal bahL caused by Lhe declslon
of Lhe 1hal governmenL Lo floaL Lhe bahL cuLLlng lLs peg Lo Lhe uS dollar 1hls was afLer
exhausLlve efforLs Lo supporL lL ln Lhe face of a severe flnanclal overexLenslon LhaL was ln parL
real esLaLe drlven AL Lhe Llme 1halland had acqulred a burden of forelgn debL LhaL made Lhe
counLry effecLlvely bankrupL even before Lhe collapse of lLs currency As Lhe crlsls spread mosL
of SouLheasL Asla and !apan saw slumplng currencles devalued sLock markeLs and oLher asseL
prlces and a preclplLous rlse ln prlvaLe debL
lndonesla SouLh korea and 1halland were Lhe counLrles mosL affecLed by Lhe crlsls Pong kong
Malaysla Laos and Lhe hlllpplnes were also hurL by Lhe slump 1he eoples 8epubllc of Chlna
aklsLan lndla 1alwan Slngapore 8runel and vleLnam were less affecLed alLhough all suffered
from a loss of demand and confldence LhroughouL Lhe reglon lorelgn debLLoCu raLlos rose
from 100 Lo 167 ln Lhe four large ASLAn economles (1halland lndonesla Malaysla
Slngapore) ln 199396 Lhen shoL up beyond 180 durlng Lhe worsL of Lhe crlsls ln SouLh
korea Lhe raLlos rose from 13 Lo 21 and Lhen as hlgh as 40 whlle Lhe oLher norLhern newly
lndusLrlallzed counLrles fared much beLLer
1he effecLs of Lhe crlsls llngered Lhrough 1998 ln 1998 Lhe hlllpplnes growLh dropped Lo
vlrLually zero Cnly Slngapore and 1alwan proved relaLlvely lnsulaLed from Lhe shock buL boLh
suffered serlous hlLs ln passlng Lhe former more so due Lo lLs slze and geographlcal locaLlon
beLween Malaysla and lndonesla 8y 1999 however analysLs saw slgns LhaL Lhe economles of
Asla were beglnnlng Lo recover

8ackground
1he Aslan flnanclal crlsls of 199798 came close on Lhe heels of Lhe LaLln Amerlcan crlsls of
199493
SlmllarlLles 8oLh crlses were Lrlggered by Lhe sudden collapse of ma[or reglonal currencles Lhe
Mexlcan peso and Lhe 1hal bahL recedlng Lhe crlses perlods Lhere were several slmllarlLles
beLween Lhe Lwo caLalysL counLrles Mexlco and 1halland had recelved large caplLal lnflows and
forelgn lnvesLmenL ln Lhe 1990s and had been hlghly regarded by lnLernaLlonal lnvesLors
Powever boLh had experlenced deLerloraLlon ln Lhelr exporL growLh raLes and rlse ln currenL
accounL deflclLs ln Lhe years before Lhe crlses 1he peso and bahL had also appreclaLed
slgnlflcanLly Cvervalued exchange raLes speculaLlve aLLacks and lnvesLor panlc all led Lo
currency depreclaLlon
ulfferences 1here were aL Lhe same Llme slgnlflcanL dlfferences beLween Lhe Lwo crlses
8efore Lhe flnanclal crlsls of 1997 Lhe model of developmenL adopLed by Lhe LasL Aslan
economles was wldely accepLed as belng exLremely conduclve for susLalned growLh over a long
perlod unllke Lhe LaLln Amerlcan counLrles Lhese economles had been dlsLlngulshed by Lhelr
hlgh raLes of caplLal accumulaLlon and savlngs and sLrong cooperaLlon beLween Lhe sLaLe and
Lhe prlvaLe secLor 1hey experlenced hlgh growLh raLes low lnflaLlon and balanced governmenL
budgeLs lor example Lhe 1hal economy had a budgeL surplus of 26 percenL of Cu ln Lhe
1991 Lo 1996 perlod Malaysla recorded an lnflaLlon raLe of 42 percenL whlle korea had a
savlngs raLe of 348 percenL ln Lhe same perlod 1hus many of Lhe usual macroeconomlc
lndlcaLors of any flnanclal crlsls dld noL reglsLer any slgnlflcanL changes for Lhe LasL Aslan
economles 1hus Lhe crlsls caughL mosL of Lhe global flnanclal sysLem unaware
lL was however Lhe facLors LhaL had made Lhe LasL Aslan economles such sLellar successes
promoLed wldely by Lhe lMl and Lhe World 8ank whlch became Lhe reasons for Lhe flnanclal
crlsls LhaL was Lo follow 1here was rapld caplLal accumulaLlon buL lL was mosLly by hlghly
leveraged lndusLrles ln exporLs and real esLaLe

1he Cr|s|s 8eg|ns
1he mosL lmporLanL warnlng slgn of Lhe lmpendlng crlsls was Lhe fraglllLy of Lhe flnanclal
sysLem CredlL exLended by Lhe banks Lo Lhe prlvaLe secLor expanded very rapldly flnanced
mosLly by Lhe banks' huge offshore borrowlngs llnanclal secLor clalms on Lhe prlvaLe secLor
lncreased from 100 percenL ln 1990 Lo approxlmaLely 140 percenL ln Malaysla 1halland and
korea rograms of parLlal flnanclal llberallzaLlon ln Lhe laLe 1980s and early nlneLles had
allowed Lhe banks Lo channel forelgn money lnLo Lhe domesLlc secLor lor example ln 1halland
forelgn llablllLles of commerclal banks lncreased from 39 percenL Lo 284 percenL of Cu
beLween 1992 and 1993 1he LoLal lnLernaLlonal clalms held by forelgn banks lncreased from
abouL 183 bllllon dollars for 1halland korea and lndonesla ln end 1993 Lo 231 bllllon dollars ln
mld 1997 A large parL of Lhls bank credlL was used by Lhe prlvaLe secLor for real esLaLe
lnvesLmenL 8eal esLaLe loans ranged from 30 Lo 40 percenL ln 1halland and 13 Lo 23 percenL ln
SouLh korea by laLe 1997
1he problem of moral hazard affllcLed much of Lhe credlL exLended Lo Lhe prlvaLe secLor As Lhe
flnance companles and banks borrowed heavlly from abroad Lhey accumulaLed shorL Lerm
unhedged llablllLles and lenL long Lerm Lo flnance pro[ecLs wlLh quesLlonable vlablllLy and soon
Lhe borrowers mlssed repaymenLs 1hese sLrucLural lmperfecLlons led Lo dlsLorLlons raLlos of
corporaLe debL Lo equlLy averaged 393 percenL ln SouLh korea and 430 percenL ln 1halland as
Lhe borrowlng boom acceleraLed compared Lo 106 percenL ln uSA
1he borrowlng boom Lherefore was ln several ways Lhe caLalysL of Lhe LasL Aslan flnanclal
crlsls AlLhough Lhe economles had sLrong fundamenLals Lhelr flnanclal excesses made Lhem
vulnerable Lo exLernal shocks 8orrowlng shorL Lerm lendlng long Lerm borrowlng ln dollars
and yen and lnvesLlng ln asseLs whlch ylelded reLurns ln domesLlc currencles made Lhem even
more so ln 1993 Lhe sLrengLhenlng dollar (agalnsL Lhe yen) led Lo an appreclaLlon of Lhe LasL
Aslan currencles LhaL were pegged agalnsL Lhe dollar 1hls weakened Lhelr exporLs and
LhreaLened Lhe sLablllLy of Lhe domesLlc currencles 1here were addlLlonal rlsks banks ln Lhe
debLor Aslan flve counLrles (1halland lndonesla SouLh korea hlllpplnes and Malaysla) could
noL hedge Lhelr neL holdlngs of shorL Lerm dollar llablllLles ln Lhe pre crlsls perlod 8lsk
premlums ln Lhe domesLlc lnLeresL raLes of debLor economles wlLh orlglnal sln

were also hlgher
Lhan on dollar asseLs of comparable maLurlLy 1herefore Lhe banks Lended Lo over borrow ln
dollars wlLhouL coverlng for exchange rlsk When a speculaLlve currency aLLack occurred ln Lhls
slLuaLlon lL forced an lmmedlaLe repaymenL of shorL Lerm dollar debLs 1he banks could have
Lrled Lo defend Lhe respecLlve currencles by runnlng down Lhe reserves buL evenLually Lhe
currency would have Lo be devalued 1he comblnaLlon of Lhese facLors lnlLlaLed Lhe LasL Aslan
crlsls ln 1halland
ln Malaysla Lhe raLlo of flnanclal lnsLlLuLlons' clalms Lo domesLlc Cu had lncreased Lo 1446
percenL by 1996 1he 1hal currenL accounL deflclL reached 8 percenL of Lhe Cu ln laLe 1996
prompLlng forelgn credlLors Lo wlLhdraw Lhelr 1hal sLockholdlngs 1he 1halland cenLral bank
Lrled Lo lnlLlally supporL Lhe bahL ln Lhe face of decllnlng lnflows of forelgn exchange buL Lhen
gave up 1he collapse of Lhe 1hal bahL formally lnlLlaLed Lhe LasL Aslan flnanclal crlsls CLher
reglonal currencles followed sulL and Lhe flnanclal crlsls rapldly Lurned lnLo a full blown
downLurn wlLh slgnlflcanL effecLs on Lhe real secLor as well

Contag|on and the Cr|s|s
1he conLaglon effecL could be clearly seen ln case of Lhe LasL Aslan economles AlLhough Lhe
LasL Aslan crlsls was Lrlggered off ln Lhe 1hal flnanclal markeLs lL spread falrly qulckly Lo
Malaysla korea hlllpplnes and lndonesla 8eal llnkages beLween Lhe economles meanL LhaL
Lhe effecLs were noL dellmlLed Lo Lhe flnanclal secLor only 1he affecLed economles wlLnessed a
sharp decllne ln ouLpuL employmenL and sLandards of llvlng
1he fallure of Lhe 1hal cenLral bank Lo supporL Lhe bahL and lLs subsequenL floaL on !uly 2 1997
had an lmpacL on Lhe nelghbourlng currencles of Malaysla lndonesla and hlllpplnes 8y Lhe
beglnnlng of Lhe lasL quarLer of 1997 Lhe rlnglLL had losL 30 of lLs value before Lhe sLarL of Lhe
crlsls
ln SouLh korea Lhe wldespread bankrupLcles of corporaLlons senL sLock prlces splralllng
downwards and Lhe prompLed forelgn lnvesLors Lo dump Lhelr holdlngs AfLer lnlLlal aLLempLs
by Lhe cenLral bank Lo supporL Lhe won by runnlng down reserves and ralslng Lhe lnLeresL raLes
SouLh korea also abandoned Lhe defense of lLs currency ln november 1997 Pence Lhe flnanclal
lnLerllnkages beLween Lhe LasL Aslan economles led Lo Lhe Lransmlsslon of Lhe crlsls LhaL began
ln 1halland Lo Lhe enLlre reglon wlLh Lhe excepLlons of !apan and Slngapore
1he hlghesL percenLage change ln Lhe bahL occurred ln !anuary 1998 and Lhls followed a
perslsLenL decllne ln forelgn reserves from a hlgh of more Lhan 31 bllllon dollars ln CcLober
1997 8oLh Lhese facLs lllusLraLe Lhe advenL of Lhe currency crlsls ln 1halland Malaysla and
SouLh korea also saw Lhe maxlmum depreclaLlon ln Lhelr respecLlve currencles ln !anuary 1998
1he forelgn reserves ln SouLh korea began Lo fall ln CcLober 1997 unllke Malaysla however
where Lhe decllne ln reserves was noL reversed almosL unLll Lhe lasL quarLer of 1998 korean
reserves recovered almosL lmmedlaLely ln Aprll 1998
1he lndlan 8upee never experlenced Lhe exLreme depreclaLlon 1he maxlmum percenLage
change was only abouL 20 percenL and even Lhls occurred well afLer bahL won and rlnglLL had
depreclaLed Lhe mosL lorelgn reserves also dld noL flucLuaLe very wldely 1hese facLors
LogeLher suggesL LhaL lndla remalned mosLly lmmune from Lhe conLaglon effecL

Causes
A greaL deal of efforL has been devoLed Lo Lrylng Lo undersLand Lhe causes of Lhe crlsls
O Cne vlew ls LhaL Lhere was noLhlng lnherenLly wrong wlLh LasL Aslan economles whlch
have hlsLorlcally performed very well 1hese economles experlenced a surge ln caplLal
lnflows Lo flnance producLlve lnvesLmenLs LhaL made Lhem vulnerable Lo a flnanclal
panlc 1haL panlcand lnadequaLe pollcy responsesLrlggered a reglonwlde flnanclal
crlsls and Lhe economlc dlsrupLlon LhaL followed
O An alLernaLlve vlew ls LhaL weaknesses ln Aslan flnanclal sysLems were aL Lhe rooL of Lhe
crlsls 1hese weaknesses were caused largely by Lhe lack of lncenLlves for effecLlve rlsk
managemenL creaLed by lmpllclL or expllclL governmenL guaranLees agalnsL fallure
(Moreno asadllla and 8emolona 1998 and oLhers clLed below) 1he weaknesses of Lhe
flnanclal secLor were masked by rapld growLh and accenLuaLed by large caplLal lnflows
whlch were parLly encouraged by pegged exchange raLes

V|ew 1 8oom and 8ust |n As|a
CperaLlng ln an envlronmenL of flscal and moneLary resLralnL mosL of LasL Asla en[oyed hlgh
savlngs and lnvesLmenL raLes robusL growLh and moderaLe lnflaLlon for several decades
SLarLlng ln Lhe second half of Lhe 1980s rapld growLh was accompanled by sharp lncreases ln
asseL values noLably sLock and land prlces and ln some cases by rapld lncreases ln shorLLerm
borrowlng from abroad
1he economlc shocks affecLlng LasL Asla were noL followed by a normal cycllcal downLurn buL
whaL some descrlbe as runs on flnanclal sysLems and currencles Some argue LhaL Lhese runs
reflecLed a classlc flnanclal panlc LhaL dld noL reflecL poor economlc pollcles or lnsLlLuLlonal
arrangemenLs As ls well known even wellmanaged banks or flnanclal lnLermedlarles are
vulnerable Lo panlcs because Lhey LradlLlonally engage ln maLurlLy LransformaLlon 1haL ls
banks accepL deposlLs wlLh shorL maLurlLles (say Lhree monLhs) Lo flnance loans wlLh longer
maLurlLles (say a year or longer) MaLurlLy LransformaLlon ls beneflclal because lL can make
more funds avallable Lo producLlve longLerm lnvesLors Lhan Lhey would oLherwlse recelve
under normal condlLlons banks have no problem managlng Lhelr porLfollos Lo meeL expecLed
wlLhdrawals Powever lf all deposlLors declded Lo wlLhdraw Lhelr funds from a glven bank aL
Lhe same Llme as ln Lhe case of a panlc Lhe bank would noL have enough llquld asseLs Lo meeL
lLs obllgaLlons LhreaLenlng Lhe vlablllLy of an oLherwlse solvenL flnanclal lnsLlLuLlon
LasL Aslan flnanclal lnsLlLuLlons had lncurred a slgnlflcanL amounL of exLernal llquld llablllLles
LhaL were noL enLlrely backed by llquld asseLs maklng Lhem vulnerable Lo panlcs As a resulL of
Lhls maLurlLy LransformaLlon some oLherwlse solvenL flnanclal lnsLlLuLlons may lndeed have
been rendered lnsolvenL because Lhey were unable Lo deal wlLh Lhe sudden lnLerrupLlon ln Lhe
lnLernaLlonal flow of funds
AfLer Lhe mld1990s a serles of exLernal shocks (Lhe devaluaLlon of Lhe Chlnese remnlmbl and
Lhe !apanese yen and Lhe sharp decllne ln semlconducLor prlces) adversely affecLed exporL
revenues and conLrlbuLed Lo slowlng economlc acLlvlLy and decllnlng asseL prlces ln a number
of Aslan economles ln 1halland Lhese evenLs were accompanled by pressures ln Lhe forelgn
exchange markeL and Lhe collapse of Lhe 1hal bahL ln !uly 1997
1he evenLs ln 1halland prompLed lnvesLors Lo reassess and LesL Lhe robusLness of currency pegs
and flnanclal sysLems ln Lhe reglon 1he resulL was a wave of currency depreclaLlons and sLock
markeL decllnes flrsL affecLlng SouLheasL Asla Lhen spreadlng Lo Lhe resL of Lhe reglon ln Lhe
year afLer collapse of Lhe bahL peg Lhe value of Lhe mosL affecLed LasL Aslan currencles fell 33
83 agalnsL Lhe uS dollar (measured ln dollars per unlL of Lhe Aslan currency) and Lhe mosL
serlous sLock decllnes were as greaL as 4060
ulsrupLlons ln bank and borrower balance sheeLs led Lo wldespread bankrupLcles and an
lnLerrupLlon ln credlL flows ln Lhe mosL severely affecLed economles As a resulL shorLLerm
economlc acLlvlLy slowed or conLracLed severely ln Lhe mosL affecLed economles

V|ew 2 Lack of |ncent|ves for r|sk management
1wo characLerlsLlcs common ln counLrles LhaL have experlenced flnanclal crlses were presenL ln
a number of LasL Aslan economles llrsL flnanclal lnLermedlarles were noL always free Lo use
buslness crlLerla ln allocaLlng credlL ln some cases wellconnecLed borrowers could noL be
refused credlL ln oLhers poorly managed flrms could obLaln loans Lo meeL some governmenL
pollcy ob[ecLlve PlndslghL reveals LhaL Lhe cumulaLlve effecL of Lhls Lype of credlL allocaLlon can
produce masslve losses Second flnanclal lnLermedlarles or Lhelr owners were noL expecLed Lo
bear Lhe full cosLs of fallure reduclng Lhe lncenLlve Lo manage rlsk effecLlvely ln parLlcular
flnanclal lnLermedlarles were proLecLed by lmpllclL or expllclL governmenL guaranLees agalnsL
losses because governmenLs could noL bear Lhe cosLs of large shocks Lo Lhe paymenLs sysLem
or because Lhe lnLermedlarles were owned by MlnlsLers nephews Such guaranLees can
Lrlgger asseL prlce lnflaLlon reduce economlc welfare and ulLlmaLely make Lhe flnanclal sysLem
vulnerable Lo collapse
1he lmporLance of lmpllclL governmenL guaranLees ln Lhe mosL affecLed economles ls
hlghllghLed by Lhe generous supporL glven Lo flnanclal lnsLlLuLlons experlenclng dlfflculLles lor
example ln SouLh korea Lhe very hlgh overall debL raLlos of corporaLe conglomeraLes (400 or
hlgher) suggesL LhaL Lhese borrowers were ulLlmaLely counLlng on governmenL supporL ln case
of adverse ouLcomes 1hls was conflrmed by evenLs ln 1997 when Lhe governmenL encouraged
banks Lo exLend emergency loans Lo some Lroubled conglomeraLes whlch were havlng
dlfflculLles servlclng Lhelr debLs and supplled speclal loans Lo weak banks 1hese responses
furLher weakened Lhe flnanclal poslLlon of lenders and conLrlbuLed Lo Lhe uncerLalnLy LhaL
Lrlggered Lhe flnanclal crlsls Lowards Lhe end of 1997

Cther factors affect|ng the cr|s|s
Slnce weaknesses ln LasL Aslan flnanclal sysLems had exlsLed for decades and were noL unlque
Lo Lhe reglon why dld Asla noL experlence crlses of Lhls magnlLude before? 1wo explanaLlons
are llkely llrsL rapld growLh dlsgulsed Lhe exLenL of rlsky lendlng lor many years such growLh
allowed flnanclal pollcles LhaL shlelded flrms LhaL lncurred losses from Lhe adverse effecLs of
Lhelr declslons Powever such pollcles would make economles hlghly vulnerable durlng perlods
of uncerLalnLy Second lnnovaLlons ln lnformaLlon and LransacLlons Lechnologles have llnked
Lhese counLrles more closely Lo world flnanclal markeLs ln Lhe 1990s Lhus lncreaslng Lhelr
vulnerablllLy Lo changes ln markeL senLlmenL
Closer lnLegraLlon wlLh world flnanclal markeLs adds dlmenslons of vulnerablllLy LhaL are noL
presenL ln a closed economy ln a closed economy bad loans caused by rlsky lendlng may noL
lead Lo a run because deposlLors know LhaL Lhe governmenL can supply enough llquldlLy Lo
flnanclal lnsLlLuLlons Lo prevenL any losses Lo deposlLors ln an open economy LhaL same
ln[ecLlon of llquldlLy can desLablllze Lhe exchange raLe As a resulL durlng perlods of
uncerLalnLy runs or speculaLlve aLLacks on a currency can be avolded only lf Lhe holders of
domesLlc asseLs are assured LhaL Lhe governmenL can meeL Lhe demand for forelgn currency
1hose LasL Aslan economles where forelgn exchange reserves were large relaLlve Lo Lhelr shorL
Lerm borrowlng (hlllpplnes Malaysla and 1alwan) were ln a beLLer poslLlon Lo provlde such
assurances Lhan Lhose economles where such reserves were relaLlvely low (SouLh korea
lndonesla and 1halland) (Slngapore and Pong kong are excluded from Lhls comparlson
because Lhelr role as offshore flnanclal cenLers clouds lnLerpreLaLlon of Lhe daLa
llnanclal secLor vulnerablllLy was accenLuaLed by a Lendency noL Lo hedge forelgn currency
borrowlng ln counLrles wlLh pegged exchange raLes MarkeL parLlclpanLs may have lnLerpreLed
currency pegs as lmpllclL governmenL guaranLees agalnsL Lhe rlsk of currency volaLlllLy backed
by forelgn reserves LhaL would be made avallable Lhrough cenLral bank currency lnLervenLlon
Whlle Lhe absence of hedglng slgnlflcanLly lowered Lhe cosL of funds (ln Lhe shorL run) for Lhose
flrms wlLh access Lo forelgn credlL Lhe consequenL mlsprlclng of forelgn credlL conLrlbuLed Lo
excesslve caplLal lnflows and Lhe vulnerablllLy of borrowers wlLh heavy exposure Lo forelgn
currency loans
1he lack of hedglng also added Lo Lhe lnsLablllLy ln Aslan flnanclal markeLs once Lhe crlsls hlL
1he hlgh cosL of abandonlng currency pegs lnduced pollcymakers Lo adopL harsh conLracLlonary
measures (lnvolvlng skyrockeLlng lnLeresL raLes) Lo defend Lhe exchange raLe even when Lhe
pegs were unsusLalnable ln Lhe face of adverse markeL senLlmenL 1he efforLs of markeL
parLlclpanLs Lo cover prevlously unhedged forelgn currency exposure afLer Lhe onseL of Lhe
crlsls furLher weakened Aslan currencles AfLer Lhe pegs collapsed borrowers who had noL
hedged Lhelr forelgn currency borrowlng had dlfflculLy servlclng Lhelr debLs and ln some cases
wenL bankrupL Lhus worsenlng Lhe crlsls

Why was Ind|a ke|at|ve|y Unaffected by the I|nanc|a| Cr|s|s?
CuLpuL growLh ln lndla slowed from 7 8 ln 199496 Lo 33 ln 199798 1he slowdown
reflecLed malnly domesLlc facLors parLlcularly Lhe sLalllng of Lhe sLrucLural reform process and
Lhe deLerloraLlon ln governmenL flnances raLher Lhan Lhe reglonal crlsls lndla was a relaLlvely
closed economy exporLs comprlse only abouL 8 of Cu wlLh only abouL 13 of exporLs
dlrecLed Lo Lhe resL of Asla (excludlng !apan) so LhaL Lhe adverse effecL of Lhe crlsls on Lhe
balance of paymenLs and domesLlc acLlvlLy had been relaLlvely modesL CaplLal conLrols whlle
enLalllng longerLerm cosLs appear Lo have helped Lo llmlL lndla's vulnerablllLy Lo abrupL
movemenLs ln shorLLerm caplLal neL lnflows of prlvaLe caplLal durlng 199296 averaged only
13 of Cu ln lndla compared wlLh 88 ln 1halland 103 ln Malaysla and 48 ln
lndonesla AlLhough longerLerm lnflows were adversely affecLed by Lhe reglonal Lurmoll as
well as Lhe sancLlons LhaL followed nuclear LesLs ln May 1998 lndla's llmlLed dependence on
forelgn caplLal as well as Lhe $42 bllllon lssue of 8esurgenL lndla 8onds Lo nonresldenL lndlans
ln laLe 1998 helped Lo cushlon Lhe lmpacL As a resulL durlng Lhe perlod lndla's forelgn
exchange reserves remalned aL Lhe equlvalenL of a comforLable 63 monLhs of lmporLs

keferences
O wwwadborg
O wwwLlmesoflndlalndlaLlmescom
O wwwlnvesLopedlacom
O wwwredlffcom
O wwwfrbsforg