The 1997 Asian financial crisis began in Thailand when the country abandoned its baht peg.
Thailand had maintained a managed exchange rate linking the baht closely to the U.S. dollar. After heavy speculative pressure and falling foreign-exchange reserves, the government allowed the currency to float on July 2, 1997. The baht then lost substantial value.
Financial stress spread across the region. Indonesia, South Korea, Malaysia, and other economies experienced currency collapses, banking problems, recessions, and corporate failures. Many businesses had borrowed in foreign currencies, so devaluation made their debts far more expensive in local-currency terms.
The International Monetary Fund organized assistance programs for several affected countries. The crisis is often remembered as a currency crisis, but it also exposed weaknesses in banks, corporate finance, regulation, and short-term foreign borrowing.