Tragedy Monetary Crisis in Indonesia 1998
Tragedy Monetary Crisis 1998 in Indonesia The Indonesian Crisis Begins Although the Asian region showed worrying signs, foreign investors initially kept confidence in the Indonesian technocrats' ability to weather the financial storm (as they had done before in the 1970s and 1980s). But this time, however, Indonesia would not get off scot-free. It became the hardest-hit country because the crisis not only had economic but also significant and far-reaching political and social implications. When pressures on the Indonesian rupiah became too strong, the currency was set to float freely starting from August 1997. Soon it began depreciating significantly. By 1 January 1998, the rupiah's nominal value was only 30 percent of what it had been in June 1997. In the years prior to 1997 many private Indonesian companies had obtained unhedged, short-term offshore loans in US dollars, and this enormous private-sector debt turned out to be a time bomb waiting to expl