Which 1997 Asian financial crisis event forced Thailand to abandon its baht’s fixed exchange-rate regime?

The baht devaluation forced Thailand to abandon its fixed exchange-rate regime during the 1997 Asian financial crisis.

Thailand allowed the baht to float on July 2, 1997, after spending large amounts of foreign currency defending its peg to the U.S. dollar. Once the defense became unsustainable, the currency fell sharply. The decision is widely treated as the crisis’s starting point.

Thailand had accumulated large foreign debts, much of them short-term, while property and equity markets had become overheated. Investors became concerned about the country’s current-account deficit and financial institutions. Speculative pressure then spread as confidence weakened.

The crisis moved through Indonesia, South Korea, Malaysia, and other economies, though each country had different vulnerabilities. “Devaluation” describes the sharp reduction in the baht’s value, while “float” describes the exchange-rate policy change that allowed market forces to determine its price.