"...Three Stages of a Currency Crisis
Stage #1: Loss of Confidence
The number one cause of a currency crisis is when investors flee a currency because they expect it to be devalued....
Stage #2: Herding
When it’s thought that investors are moving out of a currency, others follow. This is typical “herding” psychology...
Stage #3: Contagion
The next step is contagion. And contagion is a phenomenon in which a currency crisis in one country triggers crisis in other countries with similar weaknesses...."
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