Page 260 - A Banker Down the Rabbit Hole

intervene and would allow the Baht to float. The sharp depreciation of
the Baht against the US dollar began the very same day. This immediately
triggered panic among investors, and other regional currencies such as
the Philippine Peso, Indonesian Rupiah and Malaysian Ringgit also began
to experience selling pressure. Soon, foreign investors lost confidence in
not only the currencies but also in those economies that had, what they
saw, weak fundamentals.

Another reason for crisis was the excessive foreign debt and investing it
in excessive unproductive assets with a strong possibility of not being able
to generate adequate income to repay with high possibility of default on
maturity of debts. In countries most affected by the crisis, banks and
other companies collapsed or had to be rescued, and many others were
forced to downsize, resulting in massive unemployment. In Indonesia, the
crisis even led to the resignation of then president Suharto.

Impact on Singapore's economy
Given its close economic links with the other South Asian countries,
Singapore could not escape the effects of the financial crisis affecting its
regional neighbors despite its own strong economic fundamentals. From
a healthy 8% growth rate registered in 1997, Singapore's GDP growth fell
to a dismal 1.5 percent in 1998. The impact on Singapore was indirect
but wide-ranging. Poor performance across various industry sectors,
namely manufacturing, commerce, construction, and transport and
communications, led to the retrenchment of about 28,000 workers in
1998. Company closures and downsizing also led to lower demand for
commercial, industrial and residential properties, which put downward
pressure on property prices and rentals. Stock prices fell and this had a
negative wealth effect which further weakened the Consumer sentiment.

My state of mind then
This situation was a cause of worry for me. I was the next top dollar
earner after the directors. They were already functioning without me
earlier than this. I could be the first to be replaced to cut costs. For a
few months, I had a lot of apprehensions and stress.

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