But the dominant LDP party loses elections for the Upper House, forcing the resignation of Hashimoto Ryutaro as prime minister. The markets react negatively to Japan's new prime minister, Obuchi Keizo, who is seen as a weak and uncharismatic leader. Russia devalues the ruble, causing panicky depositors to take their money from banks. Hong Kong intervenes in the bourse as part of its defense of its currency. The Asian Crisis spreads to Latin America as devaluation pressures intensify in Brazil and Venezuela.
Japanese politicians compromise on a banking reform law.
And the G7 group of industrialized nations pledges to come up with concrete measures to help economies in Asia and elsewhere. To cover massive losses in Russia and Hong Kong and under pressure from banks to repay credit lines, LTCM and other hedge funds unwind bets against the yen. Rates in Asia come down while stock markets climb up. The rally continues. Other currencies, including the rupiah, show remarkable strength too.