What event triggered the 1997 Asian financial crisis after Thailand abandoned its currency peg?

The 1997 Asian financial crisis was triggered by Thailand’s baht devaluation.

On July 2, 1997, Thailand abandoned its fixed exchange-rate system and allowed the baht to float. The currency quickly lost value, after years of heavy borrowing, property speculation, current-account deficits, and pressure on Thailand’s foreign-exchange reserves.

Investors then reassessed other Asian economies with similar vulnerabilities. Currency and stock-market pressure spread to Indonesia, South Korea, Malaysia, and the Philippines. The crisis also affected Hong Kong, where authorities defended the currency peg and stock market under intense pressure.

The International Monetary Fund arranged rescue programs for several countries, including Thailand, Indonesia, and South Korea. The episode is sometimes called the Asian stock-market crash, but it was both a currency and financial crisis. The baht’s devaluation was the immediate catalyst, not the only underlying cause.