The Thai baht was the first major currency to collapse in the 1997 Asian financial crisis. Thailand abandoned its dollar peg on July 2, 1997, allowing the baht to float and fall sharply.
Before the crisis, Thailand had attracted large foreign capital inflows and experienced rapid credit growth, property speculation, and substantial borrowing in foreign currencies. Maintaining the baht’s exchange-rate peg became increasingly difficult as pressure mounted on Thailand’s foreign-exchange reserves.
After the devaluation, financial stress spread to other economies. Indonesia’s rupiah, Malaysia’s ringgit, and South Korea’s won came under intense pressure. Stock markets plunged, companies struggled with foreign-currency debts, and several countries required international financial assistance.
The International Monetary Fund arranged a major rescue program for Thailand in August 1997. The crisis demonstrated how quickly currency weakness, bank fragility, corporate debt, and investor panic could move across interconnected markets.