... accompanied by clear deflating symptoms and a banking crisis of great proportions. Likewise, the Japanese yen began to devaluate in front of the dollar and other strong currencies, increasing the competition between Japan and the Asian tigers in the external markets. In contrast, the real appreciation observed in Asia in the 1990s was in part consequence of the exchange rate regime (fixed exchange rates) and the ensuing capital inflows, leading to a monetary appreciation and to external imbalances, hence the increase of the debt in dollars and with weaker currencies, more local currency was needed to pay the interest denominated in dollars. Besides, it represented a loss of real competitiveness of its products (as imports become cheaper and exports more expensive) hence, the exports of those countries stopped, partly due to the appreciation of their currencies, and the decrease of the Japanese imports. http://www.stern.nyu.edu/globalmacro/ Diverse factors indicated that the ...

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