Pegged stability, yet hot-money drift rising
Question
Exchange rates were pegged or tightly managed, CPI was tame, and growth was strong. Capital inflows kept plants and property booming—until FX pegs snapped, reserves slid, and funding shut. Could a simple stability band beside the existing series have shown the hot-money drift and fragility building before 1997–98?
Answer ✅
Yes. Totals masked posture drift: short-term external debt climbed vs exports and reserves, inflows skewed shorter and faster, corporate USD liabilities grew against local-currency revenues, and peg defenses became bursty. SSM-Audit adds a read-only stability band beside KPIs you already track, revealing whether the calm is durable (A+/A++) or brittle (A0/A-/A–) even while the peg still prints.
What the bands would have shown 📊
• Short-Term External Debt Ratio (<=12m debt vs reserves/exports) sliding from A+ toward A0/A-
• FX Peg Pressure band weakening (A+ → A0) as micro-deviations cluster near defense edges
• Capital Inflow Cadence degrading to A- (hotter, more reversal-prone flows)
• Corporate FX-Mismatch drifting down-band (A0 → A-) as USD liabilities outpace USD earnings
• Reserve Adequacy Drift softening to A0 (more intervention days, larger clips per defense)
What to do now 🛠️
- Cap near-term rollover risk: if Short-Term External Debt Ratio band < A0, pre-fund maturities, stagger tenors, and raise contingent lines.
- Cool the peg defense cadence: replace burst interventions with steadier bands; publish tolerance corridors when FX Peg Pressure hits A-.
- Trim mismatch: encourage natural hedges; require FX-risk attestations for new USD borrowing when the mismatch band drops.
- Rebalance inflows: nudge toward FDI/longer funds; throttle hot inflows if Capital Inflow Cadence sits at A-.
- Protect buffers early: if Reserve Adequacy and Peg Pressure both fall to A-, slow credit growth and tighten underwriting before the break.
How SSM-Audit helps (practicalities) 🌟
• No additional infrastructure: overlays reserves, external debt tables, BoP, and FX micro-deviation series.
• Numbers unchanged: stability is a read-only lens beside reported figures.
• Easy to use: spreadsheet/BI friendly; one lightweight weekly ritual.
• Universal language: A++ / A+ / A0 / A- / A– aligns treasury, central bank, banks, and corporates quickly.
CLI 💻 — try our mini Calculator to identify the drift
(Mini CLI Download Page)
Feed your historical series and see bands and drift at a glance (numbers unchanged).
# Near-term rollover risk (<=12m external debt vs reserves or exports)
ssm_audit_mini_calc crisis_1997.csv --kpi "Short-Term External Debt Ratio" \
--out bands_sted.csv --plot_kpi "Short-Term External Debt Ratio" --build_id 4e
# FX peg pressure (micro-deviation vs band edges)
ssm_audit_mini_calc crisis_1997.csv --kpi "FX Peg Pressure" \
--out bands_peg.csv --plot_kpi "FX Peg Pressure" --build_id 4e
# Capital inflow cadence (hot vs stable share)
ssm_audit_mini_calc crisis_1997.csv --kpi "Capital Inflow Cadence" \
--out bands_inflow.csv --plot_kpi "Capital Inflow Cadence" --build_id 4e
# Corporate FX mismatch (USD liabilities vs USD earnings)
ssm_audit_mini_calc crisis_1997.csv --kpi "Corporate FX-Mismatch" \
--out bands_fxmix.csv --plot_kpi "Corporate FX-Mismatch" --build_id 4e
# Reserve adequacy drift (days with intervention x size)
ssm_audit_mini_calc crisis_1997.csv --kpi "Reserve Adequacy Drift" \
--out bands_reserves.csv --plot_kpi "Reserve Adequacy Drift" --build_id 4e
Technical notes
Representation: x = (m, a) with a in (-1, +1)
Collapse parity: phi((m,a)) = m
Order-invariant pooling: U = sum(w_i * atanh(a_i)), W = sum(w_i), a_out = tanh( U / max(W, eps_w) )
Typical bands (example):A++: a >= 0.75A+: 0.50 - 0.75A0: 0.25 - 0.50A-: 0.10 - 0.25A--: a < 0.10
Navigation
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Page disclaimer
Illustrative scenario for research and education. Observation-only; do not use for critical decisions without independent validation.
SHUNYAYA 