History repeating

The spreading of the crisis to central and eastern Europe has caused local currencies to plunge. With financial institutions and corporates struggling to service foreign currency debt, the situation bears similarities to the Asian financial crisis. Christopher Whittall reports

A little over a decade ago, several Asian economies were badly caught out by sudden, devastating moves in the foreign exchange markets. In the build-up to the crisis, which began in July 1997 with the collapse of the Thai baht, Asian corporates and financial institutions had extensively tapped offshore capital markets - particularly in US dollars. But when Asian currencies plunged in value, the mismatch between local currency assets and dollar liabilities led to a spate of corporate bankruptcies