The Asian currency crisis was primarily a
A) parity conditions problem.
B) an asset markets problem.
C) balance of payments problem.
D) PPP problem.

Question

Quizplus · Accepted Answer

The Asian currency crisis was primarily a balance of payments problem, as many of the affected countries (such as Indonesia, Thailand, and South Korea) had large current account deficits and insufficient foreign reserves to cover them. This led to a loss of confidence in their currencies and ultimately to devaluations and economic turmoil. While there were also issues with asset markets and parity conditions, these were largely symptoms of the underlying balance of payments problems. PPP (purchasing power parity) is a theoretical concept that may influence exchange rates in the long run, but was not the primary driver of the crisis.

The Asian Currency Crisis Was Primarily a