When it became known in 1997 that the Thai government had insufficient

When it became known in 1997 that the Thai government had insufficient foreign exchange reserves to maintain the exchange rate, how did currency speculators respond? What policy did the IMF suggest?

What will be an ideal response?

ANSWER

Currency speculators began massive selling of the Thai currency, baht, which in turn depreciated further. The IMF suggested the central bank of Thailand undertake a contractionary monetary policy in order to raise interest rates and attract foreign investment.