Paper Crisis

CHAPTER 1

INTRODUCTION

1.1 Background

Crisis is something inevitable. Every country in the world tries to decide the best economic policy to ensure that their economy is still in stabil condition. However, even if there are a lot of preventive measures done by government of a country, the possibility of crisis is there. That is why, we have to learn more and more how to prevent or even close channel of crisis to happen.

In crisis time, Foreign exchange rate of a currency is crucial and influencial to be watched. Because it can easily fluctuate in time of crisis. Businessman, government, and all investors are the ones who always watched the fluctuation of exchange rate on how it rises and falls every second. Their life and business really depend on the exchange rate. Because they can suddenly be bankrupt or rich just because of this fluctuation

One of crisis had already happened in the world is Crisis in Mexico 1994. The reasons why Mexico suffer from crisis is not so different with Greece, that is because of government spending. Fortunately, Mexico has succeded to overcome their crisis. So, it is important to analyze the fluctuation of Mexican Peso foreign exchange rate before and after the crisis to know how is the best way to overcome this type of crisis.

1.2 Problem Statement

Based on background above, the writer can indentify that there are five problem, such as:

1. What were the origin of Financial Crisis in Mexico 1994-1995?

2. How was the system under crisis in Mexico 1994-1995?

3. What were the consequences of crisis in Mexico 1994-1995?

4. What did Mexico gain in the long term?

1.3 Objectives

The objectives of writting this paper are:

1. To understand the origin of Financial Crisis in Mexico 1994-1995

2. To understand how the system under crisis in Mexico 1994-1995 was

3. To understand the consequences of crisis in Mexico 1994-1995

4. To understand what Mexico gain in the long term...