of the IMF bailout package to Thailand was to prevent further currency instability in the region. Yet much of the damage had already been done. Following the devaluation of the baht, other currencies in Southeast Asia plunged. Most governments in the region were able to prevent their currencies from tumbling through a variety of monetary policies. Some of the hardest hit countries included Malaysia, Indonesia and South Korea. Each of their currencies lost nearly 40% of their value by the end of 1997. In Japan and Hong Kong stock markets experienced a drastic drop in October 1997. This was especially alarming, as these were two of the strongest economies in Asia. This stock market crisis set off a panic in many international markets as well. For example, the Dow Jones Industrial Average experienced its largest one-day point drops ever on October 27. Japan and Hong Kong slowly regained strength, Their economies have been relatively stable since the beginning of 1998. In addition to Thailand, Indonesia and South Korea also sought international assistance in attempts to save their economies. Indonesian President Suharto turned to the IMF for help in October 1997. In January 1998 they agreed to a plan that entitled Indonesia to receive $43 billion in loans from the IMF and from other nations. South Korea was very reluctant in seeking assistance, but eventually realized the dire need for help. They asked the IMF for aid in November 1997. Even though the country was experiencing extremely difficult times, many top Korean officials considered it humiliating to ask for help. Hesitation was also due to fear that the IMF would order harsh reforms in return for aid. Nonetheless, the government agreed in December 1997 to a $57 billion package coordinated by the IMF. This was the largest package the IMF had ever coordinated.Other CausesThere is general consensus that Asia's crisis was mainly caused by an excess amount of domestic investment. Many of...
