Which of the following was a significant contributing factor in the recent signi

Question

Which of the following was a significant contributing factor in the recent significant devaluation of many Asian currencies?

Poor regulation encouraged bankers throughout the region to lend on overly risky projects. The result was too much investment and an inflated property bubble.
Before the crisis, the Asian countries had floating exchange rates that easily adjusted to currency market conditions.
As a consequence of large government budget deficits in these Asian countries, the domestic central banks were printing significant sums of money to finance the deficit.
Economic growth was weak since domestic interest rates were held exhorbantly high to support the value of the domestic currency.

Explanation / Answer

Before the crisis, the Asian countries had floating exchange rates that easily adjusted to currency market conditions

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