The 1997 financial crisis that began with Thailand’s currency devaluation was the Asian financial crisis.
Thailand abandoned its baht peg to the U.S. dollar on July 2, 1997, after speculative pressure exhausted foreign-exchange reserves. The baht then fell sharply, and investors reassessed other economies whose banks and companies carried heavy short-term dollar debts.
Contagion spread to Indonesia, South Korea, Malaysia, and the Philippines, causing stock-market collapses, recessions, and emergency international lending. The International Monetary Fund organized major rescue programs, although the austerity conditions attached to them remain controversial.
Hong Kong’s currency peg survived, but its stock market plunged before recovering. The crisis was not simply a stock-market event: banking weaknesses, property bubbles, fixed exchange rates, and sudden capital flight interacted across the region.