Thailand devalued the Thai baht after abandoning its fixed exchange-rate policy during the 1997 Asian financial crisis.
On July 2, 1997, Thailand stopped defending the baht’s exchange-rate peg and allowed the currency to float. The baht had faced intense speculative pressure because Thailand’s foreign-exchange reserves were insufficient to maintain the rate indefinitely. Its fall became the starting point of a regional financial crisis.
The crisis spread through economies whose banks and companies had substantial foreign-currency debts and whose exchange rates were considered vulnerable. Indonesia, South Korea, Malaysia, and other markets experienced sharp currency declines, falling stock prices, corporate failures, and banking stress. International institutions, including the International Monetary Fund, supported several affected countries.
The baht is often confused with the rupiah, ringgit, or won because all three currencies were heavily affected later. Thailand’s decision came first in the crisis’s commonly used chronology; the subsequent turmoil spread across much of East and Southeast Asia.