International Reserve Holdings as a Means of External Risk Management: Comparative Study of Thailand and Indonesia

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Sumimaru ODANO


When one looks back over the past three decades in the Southeast Asia, it would be immediately remembered that some occasional external shocks led to cause devastating damages upon this region. One most significant case was the so-called Asian currency crisis. This shock eventually brought extremely harmful effects on those economies in 1997 and afterward. One found that this crisis created more lethargic economic situation in various Asian economies than the twice oil crises together.1 It should be noted that this crisis unexpectedly emerged. Thus those countries were not well-prepared how to deal with first of all. In those days, the Southeast Asian economies were in the midst of the comfortable economic growth stage since 1970s. Almost a decade later, the second external shock was detected in 2008. This one was the worldwide financial crisis. The crisis was triggered by the Lehman shock. It is said that the deteriorating financial environment had been brought about by the wide-spread sub-prime mess initiated by the US financial troubles. Quite interestingly, this latest shock has created less serious devastation over the region, relative to the advanced industrial countries. This second shock helps reconfirm the emerging Asian economies once more.


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