Asian Financial Crisis

The Indonesian exchange rate was close to 3600 rupiah per dollar by late October, compared to 2400 prior to July 1997. Indonesia signed the IMF standby agreement October 31st for a 36-month programme involving assistance of $40 billion made up of contributions form IMF ($10 billion), WB and ADB ($8 billion), and the balance from various countries including Japan and U.S. Read the rest of this entry »

Private Sector Debt. Borrowing by the Indonesian companies from the banks of the industrialised countries amounted to $58.7 billion by the middle of 1997. Of the total, the share of Japanese banks was about $23 billion while that of the German banks was $5.6 billion, French 4.8 billion and US banks $4.6 billion. Read the rest of this entry »

Many international business commentators are referring to the Indonesian crisis as only the first eruption of the turmoil to be unleashed by the “second and third waves” of a financial meltdown.

The “second wave” refers to the disintegration of entire sectors of the economy, particularly manufacturing, in the wake of the financial collapse since the middle of last year. This “wave” is being accelerated by the events in Indonesia, causing a further withdrawal of investment funds across the region.

According to the International Monetary Fund’s Asia-Pacific deputy director David Nellor, the “second wave” will produce a “third wave” in which the reverberations of the economic reversal are felt back in the banking sector. Read the rest of this entry »