The 1997–98 financial crisis that began in Thailand and spread across East Asia is called the Asian financial crisis. It started after Thailand abandoned its long-standing effort to maintain the baht’s peg to the U.S. dollar on 2 July 1997.
The baht’s devaluation triggered investor concern about other economies with high foreign-currency debt, property bubbles, and vulnerable financial institutions. Pressure spread to Indonesia, South Korea, Malaysia, and the Philippines. Stock markets and currencies fell sharply, while businesses and banks struggled with debts denominated in U.S. dollars.
The International Monetary Fund arranged major assistance programs, including packages for Thailand, Indonesia, and South Korea. These programs required reforms and austerity measures, which were controversial because they worsened hardship in some affected countries during the downturn.
The crisis was not simply a stock-market event: currency devaluations, banking failures, corporate debt, and capital flight were central features. Hong Kong resisted pressure on its currency but experienced a major stock-market fall in October 1997.