RDP 2001-03: The Response of Financial Markets in Australia and New Zealand to News About the Asian Crisis Appendix A: Chronology of Major Events in the Asian Crisis

Luci Ellis and Eleanor Lewis

July 2001

Date Event Type of news
1997
15 May Thailand, after a week of selling pressure and massive intervention in the forward markets, announces wide-ranging capital controls aimed at segmenting the onshore and offshore markets. bad
27 June The BoT suspends the operations of 16 troubled finance companies and orders them to submit merger or consolidation plans. bad
2 July Floating of the Thai baht (baht devalues by 15% in onshore markets; 20% in offshore markets). Pressure spreads to the Philippine peso, Malaysian ringgit and Indonesian rupiah. bad
11 July BSP announces the peso will float in a wider range, abandoning the de facto peg. BI widens the rupiah trading band from 8% to 12%. bad
14 July BNM is reported as abandoning the defence of the ringgit. bad
28 July Thai government requests IMF assistance. bad
5 August Thailand suspends a further 42 troubled finance companies. bad
14 August Indonesia abandons the rupiah trading band. The rupiah depreciates by 4%. bad
20 August Thailand and the IMF agree on a US$17 billion financial stabilisation package. good
27 August Malaysia imposes trading restrictions on the stock market including an effective ban on short selling. bad
29 August BI introduces selective credit controls on rupiah trading. bad
8 October Indonesia announces it will seek IMF assistance. bad
17 October Malaysia announces an austerity budget. Authorities stop supporting the New Taiwan dollar, which falls by 6%. Pressure on Hong Kong dollar and equity markets intensifies. Review of Thai emergency funding. bad
20–23 October Financial turbulence in Hong Kong. Hang Seng index falls by 23% in 4 days. Overnight interest rates rise from 7% to around 250%. S&P downgrades Korea and Thailand's sovereign ratings. bad
27 October The Dow Jones loses 554 points, following the crash in the Hang Seng. Equity markets in Brazil, Argentina and Mexico see their biggest single-day losses, as the crisis ripples across the globe. bad
28 October Russian equity prices decline by 23%. bad
31 October Bank resolution package announced in Indonesia, resulting in the closure of 16 troubled private banks. Leads to a depositor run on others. After intense pressure on the real, the Central Bank of Brazil doubles the central bank intervention rate to 43%. bad
5 November IMF standby credit for Indonesia of US$10.1 billion approved; US$3 billion made available immediately. good
10 November In Thailand, opposition leader Chuan Leekpai takes over as Prime Minister. In Russia, interest rates raised by 7 percentage points and authorities announce that the intervention band for the rouble will be widened from +/− 5% to +/− 15%. bad
17 November Korea abandons defence of the won. bad
18 November Korean finance minister resigns. Authorities announce a reform package. bad
20 November Daily fluctuation band for the Korean won widened from ± 2¼% to ±10%. bad
21 November Korea requests IMF assistance. bad
3 December Korea and the IMF agree on a US$57 billion financial assistance package. good
8 December Thai authorities close 56 of the suspended finance companies. bad
16 December Floating of the Korean won. bad
23 December Rating agencies downgrade Korea's sovereign rating to speculative grade. The won falls nearly 2000 per USD. bad
24 December IMF and other lenders announce speeding up of disbursement of financial assistance and that international commercial banks will roll-over short-term debts owed by Korean financial institutions. good
30 December Foreign banks agree to roll-over Korean debt. good
1998
2 January Indonesia announces plans to merge 4 out of 7 state-owned banks. Malaysia announces plans for mergers of finance companies. good
6 January Indonesian budget introduced: badly received by financial markets. bad
13 January Thailand amends law for foreign investors in banks to be reclassified as domestic companies, allowing them to hold property. good
15 January Indonesia and the IMF announce agreement on revised economic program aimed at strengthening and reinforcing the ongoing IMF-supported program. good
16 January International lenders officially agree to roll-over Korean short-term bank debt. good
20 January Thailand allows full foreign ownership of securities firms. good
27 January Indonesia guarantees commercial bank obligations, allows overseas investments in local banks and announces a freeze on debt payments. good
29 January Agreement between Korea and its external creditors to exchange US$24 billion of short-term debt for government-guaranteed loans at 2¼ – 2¾ percentage points over 6-month LIBOR. good
30 January Thailand lifts currency restrictions, reunifying the spot market. good
9–10 February Indonesia's plan to create a currency board is opposed by the IMF and several creditor governments, who threaten to withdraw financial assistance. bad
13 February IMF Managing Director Camdessus expresses further concern over Indonesia's move to a currency board. He is of the ‘strong view’ that the time for a currency board in Indonesia has ‘not yet come’ because of a number of pre-conditions. bad
4 March In a second review of Thailand's economic program, the IMF relaxes certain macroeconomic policy targets and approves disbursement of second tranche. good
10 April Indonesia signs new letter of intent on economic program with IMF. good
21 May Indonesia's president Suharto resigns. bad
25 May The Korean stock market falls to an 11-year low. bad
1 June The Thai stock market index, continuing its slide from early March, falls to a 10-year low. bad
4 June Indonesian authorities reach an agreement to restructure the external debt of Indonesia's banking and corporate sectors. good
10 June Third Quarterly Review of Thailand's assistance program: indicated restructuring on track. good
2 July World Bank approves a US$1 billion loan to Indonesia. Loan is part of US$4.5 billion pledged by the World Bank last year. good
8 July S&P affirms its CCC+ rating on the Republic of Indonesia's US$400 million Yankee bond due in 2006, the CCC+ long-term foreign currency and its B–long-term local currency issuer credit ratings. Outlook is now described as negative. bad
10 July Malaysian stock index hits 9-year low. bad
16 July IMF approves US$1 billion payment; promises another US$6 billion to Indonesia. good
24 July Moody's cuts Malaysia's foreign currency debt rating to ‘Baa2’ from ‘A2’. Reasons cited are: the country's recession; growing debt and lack of clear policy direction in response to the Asian crisis. bad
4 August Philippines benchmark stock index slides to its lowest level since April 1993 on continuing loss of confidence in the region. bad
6 August Malaysia's sovereign risk rating cut to ‘BBB’ from ‘A’ by Thomson BankWatch. bad
7 August Singapore stock index reaches a 9.5-year low. bad
11 August Agence France-Presse (AFP) reports that the Indonesian Government is in default on some of its sovereign debt. The government denies this. bad
13 August Moody's and S&P cut ratings for Russian sovereign debt. bad
14 August Hong Kong government intervenes in the stock market, purchasing an estimated HK$3 billion in stocks and futures, in an attempt to stop the speculation against the currency. bad
17 August Russia allows the rouble to float freely within a corridor between 6.00/9.50 to the USD and makes some other changes to Russian financial markets. S&P cuts Russia's long-term foreign currency debt rating to CCC from B–. bad
25 August IMF Executive Board approves extended funding arrangement for Indonesia. good
31 August S&P downgrades Hong Kong's sovereign credit rating to ‘A’, with a negative outlook. The rating agency also cites a decline in Hong Kong's financial strength because of the Asian crisis. bad

Sources: BIS (1998), Table VII.6, p 131 and IMF (1998), Box 2.12, p 49.