What was the main trigger of the 1997 Asian financial crisis, which caused stock-market crashes across the region?

Thailand’s baht devaluation was the main trigger of the 1997 Asian financial crisis, which spread through regional financial markets.

On July 2, 1997, Thailand abandoned its fixed exchange-rate policy and allowed the baht to float after intense pressure on the currency. The baht then lost substantial value. Investors began reassessing other Asian economies that had high foreign-currency debts, weak financial institutions, or property-market problems.

Capital flowed out of several markets, putting pressure on currencies and stock exchanges in Indonesia, South Korea, Malaysia, and the Philippines. Falling exchange rates made dollar-denominated debts more expensive to repay, worsening corporate and banking stress.

The International Monetary Fund organized major assistance programs for Thailand, Indonesia, and South Korea. The crisis also prompted reforms involving bank supervision, corporate debt, foreign-exchange reserves, and regional financial cooperation. Although often called an Asian stock-market crash, it was fundamentally a combined currency, banking, and debt crisis.