The start of the 1997 Asian financial crisis is commonly associated with July 2, 1997, when Thailand floated the baht.
Thailand had maintained a managed exchange rate linking the baht closely to the U.S. dollar. Heavy borrowing, property speculation, current-account pressures, and falling confidence made the arrangement increasingly difficult to defend. After spending foreign reserves to support the currency, Thai authorities allowed the baht to float on July 2.
The baht then depreciated sharply, and financial stress spread across several Asian economies. Indonesia, South Korea, and Malaysia experienced severe currency and banking pressure, while stock markets fell and companies struggled with foreign-currency debt. International Monetary Fund assistance programs helped several affected countries, but the adjustment caused deep recessions and social hardship.
The crisis was not caused by one identical problem in every country. It combined exchange-rate regimes, capital inflows, weak financial supervision, corporate leverage, and sudden reversals of investor confidence. Thailand’s currency decision was the visible starting point of the regional crisis.