ational currency exchange was more certain, thus making that investment less risky. As more and more investors became concerned with the future of the baht there was an increase in the number of bahts being exchanged for other currency units. Thailand's central bank was hoping that the large number of investors selling the baht would slow as confidence was restored in the currency. The baht experienced devaluation, which essentially lowered the price of Thai goods in dollar terms. This made Thai products more attractive to foreign consumers, as they appeared cheaper than domestic goods. Although devaluation theoretically can help a weak currency, it had other effects on the Thai economy. A large portion of the money used by Thai banks and businesses to invest in the country was borrowed from foreign financial institutions. It became increasingly difficult for these banks and businesses to repay these foreign debts, as the dollar was much stronger than the baht. Many businesses were unable to raise enough baht to cover their debts and defaulted on their loans. The large number of loan defaults caused even more problems for Thai banks, which were already close to filing bankruptcy. The Thai government tried to control the crisis, but the devaluation of the baht impaired their ability to save their banks. Thai government officials realized the need for help and began to look internationally for assistance. In August 1997, the International Monetary Fund (IMF) and several Asian countries pledged to provide a total of $16 billion in an attempt to save Thailand's financial system. In return for the loans, the government agreed to improve business practices in the country. The government had to agree to specific tax increases, implementing policies to discourage banks from making risky loans, and close more than 40 financial firms that were on the verge of bankruptcy that the government initially wanted to bail out. One of the immediate goals...
