The Thai baht was devalued on July 2, 1997, triggering the regional turmoil known as the Asian financial crisis.
Thailand had maintained the baht’s value within a managed exchange-rate system, linking it closely to the U.S. dollar. Pressure grew as Thailand accumulated debt, property speculation expanded, and foreign investors questioned whether the central bank could defend the currency. On July 2, authorities abandoned the baht’s fixed exchange-rate regime and allowed it to float.
The baht’s fall quickly affected other economies. Investors reassessed currencies and banks across Southeast and East Asia, causing capital flight, plunging exchange rates, falling stock markets, and corporate failures. Indonesia and South Korea were among the countries hit especially hard.
The crisis was not simply a stock-market event: currency mismatches, short-term foreign borrowing, weak financial regulation, and property bubbles all mattered. The International Monetary Fund arranged support programs for several affected countries.