These
countries abandoned their currency pegs only when they had substantially run out of reserves.
Thus, as the devaluations occurred, these countries were in an exceedingly vulnerable financial
position, with very high levels of short-term debt in comparison with (depleted) foreign exchange
reserves. Second, the devaluations, though unavoidable once the reserves were deplected,
amounted to a broken promise. The Abroken promise@ therefore became a focal point for
financial panic.