What term describes the 1997–1998 collapse that began with Thailand’s baht devaluation and spread across Asia?

The 1997–1998 collapse that began with Thailand’s baht devaluation and spread across Asia was the Asian financial crisis. It began on July 2, 1997, when Thailand abandoned its fixed exchange-rate policy and allowed the baht to float.

Before the crisis, several Asian economies had experienced rapid growth, large capital inflows and substantial borrowing in foreign currencies. When investors became concerned about Thailand’s debt and property markets, they withdrew funds and pressured other currencies. Indonesia, South Korea and Malaysia were among the economies hit particularly hard, while stock markets and banks suffered severe stress.

The International Monetary Fund organized rescue programs for Thailand, Indonesia and South Korea. The crisis also spread beyond Asia through financial markets, contributing to pressure on Russia in 1998 and the failure of the hedge fund Long-Term Capital Management. The episode demonstrated how exchange-rate systems, foreign-currency debt and global capital flows can connect seemingly separate markets.