The 1997 Asian financial crisis began with the collapse of Thailand’s Thai baht after the country abandoned its dollar peg. Thailand allowed the baht to float on July 2, 1997, after exhausting foreign-exchange reserves defending its fixed exchange rate.
The baht’s devaluation triggered intense pressure on other Asian currencies and financial markets. Indonesia’s rupiah and South Korea’s won later suffered severe declines, while Malaysia introduced capital controls and Singapore also faced market pressure. Highly leveraged companies, short-term foreign borrowing, weak financial supervision, and property-market problems amplified the turmoil.
The crisis was not limited to stock exchanges: currencies, banks, corporations, and sovereign finances were all affected. The International Monetary Fund arranged assistance programs for Thailand, Indonesia, and South Korea, with conditions attached to the loans. The crisis spread beyond Asia through investor repricing and reduced confidence in emerging markets.