BANK FAILURES AND CURRENCY CRISIS IN THE ASIAN REGION
This paper is an examination of the Southeast Asia currency crisis in general and its relationship to, and possible impact on, the field of international banking (The BCCI affair..., 1992, Online; Haq, 1998). One of the primary topics to be discussed is the fact that as a business and practice, an international bank has the primary goal of measuring an economy's performance and the stability of its currency so that investors can identify investment opportunities and thereby make value-added business decisions (Tamburini, 1997, 32).
Another topic addressed in this paper will be to explain and examine the reasons for the fluctuations in currency values, most of which are caused by a phenomenon caused by the currency exchange rate. Simply defined, this means the value comparison of one currency in relation to other currencies of the world. For example, if $1 is converted into 125 Japanese yen, then the exchange rate is 125 Yen/dollar. This figure is shown in financial tables in newspapers usually as YD/125:1 (McClintock, 1996, 15).
When the dollar buys more yen, it is said to be worth more and its value is said to "appreciate" while the Yen is said to "depreciate." Other ways this has been expressed in news stories is "the dollar is worth more," "the Yen is worth less," and so on. When the dollar "appreciates" against the Yen, say to 135:1, then that also means that $1 buys more Japanese goods than it would if the rate was 100:1.
Alternatively, the dollar can depreciate, and is worth less, if the number of yen it will exchange for decreases. Thus if the dollar depreciates to 115 yen, a single dollar buys fewer Japanese goods when the trade is made (McClintock, 1996, 15).
The market concept of "supply and demand" determines the exchange rate, in this case, the "supply" of the dollar versus the "demand" for the dollar. This is sometimes looked at as the "equ...