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Currency wars loom as capital flows expose the weak

Posted on 03 February 2014

Will the emerging market rout be different this time? The fear is it won’t. Defending a currency is a tricky business. Take Thailand in 1997, where massive overspending left it with a huge current account deficit and high interest rate, inflated to protect a currency pegged to the dollar.
But markets are never forgiving and speculators soon attacked the baht, believing poor economic fundamentals left the country vulnerable to shocks. Soon, much of Asia was knocking on the International Monetary Fund’s door and the contagion quickly spread. Russia was next, followed by perennial basket-case Argentina and even Brazil………………………………………..Full Article: Source


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