What 1997 crisis began after Thailand devalued the baht and spread through East Asian financial markets?

The 1997 crisis that began after Thailand devalued the baht was the Asian financial crisis.

Thailand abandoned the baht’s peg to the U.S. dollar on July 2, 1997, after heavy pressure on its foreign-exchange reserves. The currency then fell sharply, and investor concern spread to other economies with substantial foreign-currency debt, property speculation, or vulnerable financial systems.

Indonesia, South Korea, and Malaysia were among the countries hit particularly hard. Stock markets plunged, currencies depreciated, companies failed, and international assistance programs were arranged. The International Monetary Fund provided major support packages, including one for South Korea.

The crisis was not simply a stock-market event. Banking weaknesses, short-term borrowing, fixed exchange rates, rapid credit growth, and contagion across borders all contributed. Hong Kong’s market also experienced severe pressure, although its currency peg survived the episode.