The 1997–1998 collapse that began with Thailand’s currency devaluation and spread across East Asian markets is called 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 baht then lost substantial value. Investors reassessed other economies with high foreign-currency debts, property bubbles, and fixed or tightly managed exchange rates.
The crisis spread to Indonesia, South Korea, Malaysia, and the Philippines. Stock markets plunged, currencies depreciated, businesses faced debt distress, and several governments sought international assistance. The International Monetary Fund arranged major rescue programs, including support for Thailand, Indonesia, and South Korea.
The crisis was not confined to Asia. Russia defaulted on domestic debt in 1998, and financial turmoil contributed to the collapse of the hedge fund Long-Term Capital Management. The episode showed how rapidly capital flows could connect currency, banking, and stock-market crises.