Thailand experienced the 1997 Asian financial crisis’s first countrywide currency collapse. On 2 July 1997, Thailand abandoned its fixed exchange-rate regime and allowed the baht to float after sustained pressure exhausted the central bank’s ability to defend it.
The baht’s devaluation exposed weaknesses that had accumulated during Thailand’s rapid credit and property boom. Thai banks and companies had borrowed heavily in foreign currencies, so the falling baht sharply increased the domestic cost of repaying those debts. Investors then reassessed other Asian economies with similar vulnerabilities.
The turmoil spread to Indonesia, South Korea, Malaysia and elsewhere, causing market crashes, recessions and emergency international lending. Thailand’s currency move was therefore a major starting point, although the crisis developed through connected banking, debt and exchange-rate problems rather than one isolated event.