During the 1997 Asian financial crisis, Thailand devalued the Thai baht after ending its dollar peg.
On July 2, 1997, Thailand allowed the baht to float after months of pressure from investors and diminishing foreign-exchange reserves. The currency had been managed within a fixed exchange-rate system linked closely to the U.S. dollar. Once the peg ended, the baht lost substantial value and financial stress spread rapidly through the region.
The crisis affected Indonesia, South Korea, Malaysia, and several other economies. Many companies and banks had borrowed heavily in U.S. dollars, so the falling local currencies made those debts much harder to repay. Thailand later received an International Monetary Fund-led assistance package.
The baht’s devaluation is commonly treated as the starting point of the Asian financial crisis. The crisis was not simply a currency event: it also involved property bubbles, weak financial institutions, excessive foreign-currency borrowing, and collapsing investor confidence.