What is the primary reason why many Southeast Asian countries were vulnerable during the 1997 financial crisis?
Answer (1)
Many Southeast Asian countries were vulnerable in 1997 because they borrowed large amounts of money from foreign lenders in U.S. dollars instead of their own currencies. When their local currencies began to weaken, it became much harder for them to pay back their debts.At the same time, banks had weak systems for checking risky loans, and there was little transparency. When investor confidence dropped, foreign money quickly left the region, causing currencies and economies to collapse almost overnight.
