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South Asia Debt Woes Evoke Fears of Another 1997-Style Crisis

Back then, what seemed like an isolated event—Thailand’s July 1997 baht devaluation to cope with currency speculation—spread like a virus to Indonesia, Malaysia, and South Korea. Panic-stricken lenders demanded early repayments, and investors pulled out of stocks and bonds in emerging markets, including in Latin America and Russia, which defaulted on some of its debt in August 1998. A month later hedge fund Long-Term Capital Management, which had made highly leveraged bets on Russian and Asian securities, buckled.

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