Thailand devalued its baht after abandoning its fixed exchange-rate policy during the 1997 Asian financial crisis.
On July 2, 1997, Thailand allowed the baht to float after using foreign-exchange reserves to defend its peg to the U.S. dollar. The currency then fell sharply, and the financial shock spread across several Asian economies. Thailand’s decision is widely treated as the starting point of the crisis.
Before the break, Thailand had experienced rapid borrowing, a property boom, and substantial short-term foreign debt. When confidence weakened, capital flowed out and pressure on the baht intensified. Thai finance companies and banks became especially vulnerable.
The crisis later affected Indonesia, South Korea, Malaysia, and other markets, though each country had distinct policies and economic conditions. The International Monetary Fund organized a major assistance program for Thailand. The baht’s devaluation was therefore an exchange-rate event, not itself a stock-market index or a single trading-day percentage crash.