Exchange rate crises in Latin America, East Asia and Russia

Vol. 42 No. 2 (2022)

Apr-Jun / 2022
Published May 5, 2022

How to Cite

Agarwal, Manmohan, and T. R. Vandana. 2022. “Exchange Rate Crises in Latin America, East Asia and Russia”. Brazilian Journal of Political Economy 42 (2):263-82.

Exchange rate crises in Latin America, East Asia and Russia

Manmohan Agarwal
Adjunct Senior Fellow, Research and Information System for Developing Countries, New Delhi, India. Retired Professor, Centre for International Trade and Development, Jawaharlal Nehru University (JNU) New Delhi, India.
T. R. Vandana
Student of Center for Development Studies. Thiruvananthapuram/Kerala, India.
Brazilian Journal of Political Economy, Vol. 42 No. 2 (2022), Apr-Jun / 2022, Pages 263-282


A number of developing countries mainly in East Asia and Latin America and
Russia suffered exchange rate crises in the 1990s. We examine the run up to the crisis in
terms of a few macro indicators suggested by various crisis models. We then examine the
aftermath of the crisis, in contrast to most empirical work that concentrates on determining
the causes of crises. We seek to explain the pre-crisis as well as the post-crisis situation
in the light of various crisis models. We find that the first-generation crisis model despite
anomalies seems to fit the crises in Latin American countries whereas it does not fit the
crisis in the Asian countries. The Russian case is different from any of the crisis models.
The crisis eliminated the Dutch disease aspects leading to a large increase in exports and
an improvement in the current account balance. This resulted in a higher growth rate of GDP. We also find that the exchange market pressure index is not successful in predicting
the crises.

JEL Classification: E420; F310; F320.

Keywords: Monetary regime currency crisis balance of payments