The economic crisis in Thailand originated from a number of factors-both external and domestic-which in many instance were related to one another. One of them was the exceptionally high rate of growth for many years, driven by foreign investment and exports. Overheating led to the persistence and unsustainability of a high current account deficit, and inflated property and stock market. Under the pegged exchange rate regime, the implementation of monetary policy was undermined by an implicit guarantee of currency value. The implicit guarantee, coupled with financial liberalization, encouraged excessive reliance on external borrowing, due to low exchange rate risk. Positive-sloping yield curve for US dollars particularly encouraged short-term borrowing, resulting in the rapid built-up of short-term external debt implying excessive exposure of foreign exchange rate risk in both the financial and corporate sectors.