Currency crises have farreaching consequences from "summary" of International Money and Finance by Michael Melvin
Currency crises have far-reaching consequences that go beyond the immediate impact on exchange rates. When a country experiences a currency crisis, it can lead to a number of negative outcomes that affect both the domestic economy and the global financial system. One of the most significant consequences of a currency crisis is the loss of investor confidence. When investors see a country's currency rapidly losing value, they may begin to pull their money out of the country, leading to further depreciation of the currency. This loss of investor confidence can have serious repercussions for the domestic economy, as it can lead to higher inflation, reduced foreign investment, and increased borrowing costs. In extreme cases, a currency crisis can even lead to a full-blown financial crisis, with widespread bank failures and a deep recessio...
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