The Asian financial crisis was a period of financial crisis that gripped much of Asia beginning in July 1997, and raised fears of a worldwide...

2.The Asian financial crisis was a period of financial crisis that gripped much of Asia beginning in July 1997, and raised fears of a worldwide economic meltdown due to financial contagion. The crisis started in Thailand with the financial collapse of the Thai baht caused by the decision of the Thai government to float the baht, cutting its peg to the U.S. dollar, after exhaustive efforts to support it in the face of a severe financial overextension that was in part real estate driven. At the time, Thailand had acquired a burden of foreign debt that made the country effectively bankrupt even before the collapse of its currency. As the crisis spread, most of Southeast Asia and Japan saw slumping currencies, devalued stock markets and other asset prices, and a precipitous rise in private debt. (A)How can you explain the financial collapse of the Thai baht caused by the decision of the Thai government to float the baht, cutting its peg to the U.S. dollar, after exhaustive efforts to support it in the face of a severe financial overextention that was in part real estate driven?(B)Thailand had acquired a burden of foreign debt that made the country effectively bankrupt even before the collapse of its currency. Please explain how this country’s potential bankruptcy can lead to the further collapse of its currency.**In addition to descriptive analysis, graphical analysis is required.

(A)How can you explain the financial collapse of the Thai baht caused by the decision of theThai government to float the baht, cutting its peg to the U.S. dollar, after exhaustive efforts to...