The Thai baht was the currency whose devaluation helped begin the 1997 Asian financial crisis.
Thailand had maintained a relatively stable exchange rate against the U.S. dollar while borrowing heavily and experiencing a property and financial-market boom. On July 2, 1997, the government allowed the baht to float after spending reserves defending its value. The currency then lost substantial value, exposing banks and companies with large foreign-currency debts.
Financial pressure spread across the region. Indonesia, South Korea, Malaysia, and other economies faced capital flight, falling currencies, corporate failures, and stock-market declines. The International Monetary Fund arranged assistance programs for several affected countries, including Thailand, Indonesia, and South Korea.
The crisis was not simply a stock-market event. Exchange-rate regimes, short-term foreign borrowing, weak financial supervision, property speculation, and rapid investor withdrawals all interacted. The baht’s devaluation is nevertheless widely treated as the crisis’s starting point.