1998: Lessons from a seasoned Indonesian who weathered the Asian Financial Crisis OR what to do if we have a currency crisis in the United States.

Last summer, members of our team traveled to Indonesia. Their travels brought them in contact with long time business owners in Jakarta, who had very interesting insights into how they handled the Asian Financial Crisis in 1998. The financial crisis was painful for every business owner in Indonesia at the time, with the Indonesian Rupiah dropping 80% in value in one year. Those discussions seem particularly relevant in times of shifting economic landscapes, and the uncertainty in the United States mid-2025. Although we are not predicting a currency crisis, it is always good to learn and plan for any possibility. The most meaningful impact of our discussions with Indonesian business leaders was that preparation is everything: Even during a currency crisis, with proper planning you may preserve wealth and, potentially, even profit. Below are some of the insights into our discussions.

Safe-haven currencies are some of the more popular investment strategies and assets considered during a currency crisis. Switzerland's political neutrality, strong economy, and developed banking sector make the Swiss Franc (CHF) a favored safe-haven currency. The Japanese Yen (JPY) also frequently acts as a safe haven due to Japan's strong financial position and its tendency to be less affected by global economic turmoil. The deepest and broadest currency after the US Dollar, the Euro (EUR), offers many benefits for those looking for many of the same attributes of the US Dollar without being the US Dollar.

For those looking beyond currencies, precious metals are also an investment to consider. Historically, gold has been a classic safe haven. It's a physical commodity not directly affected by central bank monetary policies and tends to hold or increase its value during economic downturns and periods of high inflation. While more volatile than gold due to its industrial uses, silver can also serve as a hedge against currency devaluation.

Diversification across a large range of asset classes, having fallen out of favor over the past decade, may be worth revisiting. Real assets, such as real estate and commodities other than precious metals, may also be beneficial for a range of investment strategies. Depending on how lease agreements and loans are written, real estate can keep its value during a crisis. Also, the quality of the tenant is a major factor as well. Certain raw materials can also act as hedges against inflation and currency devaluation. Spreading assets across different countries and regions can also reduce exposure to the risks of a single currency or economy. This includes investing in foreign stocks, bonds, and real estate. While a depreciating currency means cash loses purchasing power, having a sufficient cash reserve in a high-yield savings account or short-term government bonds (like U.S. Treasury bills) can provide liquidity and flexibility to take advantage of opportunities when asset prices are low. This can also help avoid forced selling of assets.

The Asian Financial Crisis in Indonesia was a brutal test for investors. The "best" investments were those that provided a direct hedge against currency depreciation and economic instability. Holding foreign currency and physical gold were arguably the most effective strategies for preserving wealth. While the long-term recovery eventually presented opportunities in undervalued domestic assets, navigating the immediate crisis required a defensive posture focused on capital preservation in universally accepted safe havens. It also underscored the critical importance of international diversification and prudent risk management, especially in emerging markets with open capital accounts.

To have true diversification you should consider overseas investment accounts. Overseas accounts in safe haven countries such as Switzerland involve a maze of complex regulations and often requires introductions from RIA firms. Most investors will find the path blocked to directly moving assets into Switzerland because of complex and stringent anti-money laundering regulations (as it should be). For investors with over $1,000,0000 more information on how we can help is available in our Overseas Bank Accounts White Paper on our Wealth Guidance page or contacting us directly at chapman@ridgecreekglobal.com. We can help you move assets legally overseas to diversify your portfolio while also complying with all US laws, regulations, and IRS guidelines.

It's crucial to remember that no investment is entirely risk-free, and past performance is not indicative of future results. The best investments will always depend on your individual financial situation, risk tolerance, and investment goals.