Are we facing another Asian crisis?

Recent sharp falls in emerging-market currencies have drawn parallels with the 1997 Asian crisis. Are we facing a similar situation? Cris Sholto Heaton investigates.

After sharp falls in emerging-market currencies and stocks over the past few weeks, some commentators have been drawing parallels to the 1997 Asian crisis: the rolling economic turmoil that gripped much of east Asia and southeast Asia almost two decades ago. Just like China's recent decision to devalue the renminbi, the Asian crisis began with a largely unforeseen currency move: in early July 1997, Thailand was forced to abandon the fixed exchange rate between the baht and the US dollar after several weeks of attacks on the currency by traders who believed that it was overvalued.

Once the baht peg broke, traders turned their attention to the rest of the region and most other countries were also forced to abandon their pegs to the dollar. Over the course of the next year, the baht, the Malaysian ringgit, the Philippine peso and the South Korean won all fell by 35%-40%, while the Indonesian rupiah collapsed by more than 80%.

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.