Which of the following factors potentially increased the vulnerability to the 1997 Asian financial and currency crisis ?
Correct answer: B. massive reverse outflows of capital
- A. trade account surplus
- B. massive reverse outflows of capital
- C. technological transfer from DCs
- D. Symmetric informational in financial market
Explanation
A sudden reversal of capital flows can drain foreign exchange reserves, weaken currencies and expose banks and firms with foreign-currency liabilities, greatly increasing crisis vulnerability. A trade surplus and technology transfer would normally provide some protection rather than create this specific risk.
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