Which of the following contributed to the Asian Crisis?
A)The strong capital inflows from the industrialized countries mainly provided financing for large fiscal deficits in the South East Asian countries.
B)The currencies of most of the Asian countries were substantially undervalued.
C)The Hong Kong dollar was allowed to depreciate.
D)The local borrowers in the Asian countries scrambled to sell local currency to establish hedges against exchange rate risks.

Question

Quizplus · Accepted Answer

Local borrowers selling local currency to hedge against exchange rate risks contributed to the crisis by putting pressure on the currency, leading to devaluation and financial instability.

Which of the Following Contributed to the Asian Crisis