Eco 500 Currency Crisis Cause And Resolution Paper

Currency Crisis-The Turkish Currency CrisisStudent NameCourseDateInstructorCurrency Crisis: The Turkish Currency CrisisA currency crisis is a situation whereby a certain currency devaluates suddenly leading to a foreign exchange market speculation. This means a decline in value of a certain currency that causes negative effects to the economy because of resulting instabilities in exchange rates. There are many causes of a currency crisis such as monetary policy decisions, currency speculators, budget deficits, weak economy, weak financial systems, external factors, political factors, and recently deregulated financial systems. Many countries have a history of currency crisis as the crises are unpredictable. However, Turkey ranks top among the nations with the severest currency crises. Turkey experienced their worst crisis in 2000-2001 crippled its economy. The severe nature of the crisis demanded the immediate intervention of the IMF and other bodies in terms of economy management through financial assistance. Apparently, unlike other nations, the Turkish government public sector was unable to implement the free market rationale that accompanies globalization. There are also indicators that the government’s financial and fiscal system was fragile as well as the increase of vulnerability due to the dis-inflation program. The