The Thai baht was the first national currency devalued during the 1997 Asian financial crisis.
Thailand abandoned its fixed exchange-rate policy on July 2, 1997, allowing the baht to float after heavy pressure from currency speculators and dwindling foreign-exchange reserves. The currency then lost substantial value against the U.S. dollar.
Thailand’s problems included large current-account deficits, extensive foreign borrowing, property speculation, and weaknesses in financial institutions. Once the baht broke its peg, investors reassessed other economies with similar vulnerabilities. Pressure spread to Indonesia, Malaysia, South Korea, and elsewhere.
The crisis was not simply a stock-market event. Currency collapses, banking distress, corporate debt, and emergency international lending reinforced one another. The International Monetary Fund assembled support programs for several affected economies, while governments introduced painful reforms. The baht’s devaluation is nevertheless widely treated as the crisis’s starting point.