What 1997 crisis began with Thailand’s decision to let the baht float and spread across Asian markets?

The 1997 crisis that began when Thailand let the baht float and spread across Asian markets was the Asian financial crisis.

Thailand abandoned its fixed exchange-rate system on July 2, 1997, after heavy pressure on foreign-exchange reserves. The baht then depreciated sharply. Investors reassessed other economies with large foreign-currency debts, property bubbles, weak financial sectors, or currency pegs.

The turmoil spread to Indonesia, South Korea, Malaysia, and the Philippines, while Hong Kong’s stock market also came under intense pressure. Currency collapses increased the local cost of repaying dollar-denominated loans, worsening corporate and banking distress.

The International Monetary Fund arranged major assistance programs, including packages for Thailand, Indonesia, and South Korea. The crisis was centered in East and Southeast Asia, although its market effects contributed to wider global volatility.