Peregrine goes bust Peregrine, Hong Kong's largest independent investment bank, goes bankrupt as a result of bad debts to Indonesian companies run by relatives of President Suharto. Stock markets in Hong Kong and China fall. The central bank intervenes to pull the currency back from 17,000 to 11,800 to the dollar, but Indonesia suspends debt repayments a few days later. IMF and Indonesia clash Indonesia's plan for a currency board to stablise the rupiah at a fixed rate draws the ire of the IMF, which threatens to end its financial support. One month's payments are eventually held back.
Yen begins slide against dollar.
India nuclear blasts spook markets India's nuclear tests, and subsequent ones by Pakistan, hit South Asian markets and currencies as the US and Japan impose sanctions. The Indonesian government falls after riots sweep through Jakarta and other major cities. The new president, B.J. Habibe, pledges economic and political reform. The US government intervenes with the Bank of Japan in foreign currency markets for the first time to boost the yen, which has fallen to an eight year low against the dollar at 146. The Long Term Credit Bank of Japan, the 22nd largest in the world, is in merger talks with Sumitomo Trust Bank, to stave off a collapse.