Which 1997 crisis began after Thailand devalued the baht and spread through several Asian economies?

The Asian financial crisis began in 1997 after Thailand devalued the baht and spread through several Asian economies. Thailand abandoned its fixed exchange-rate regime on 2 July 1997 after exhausting foreign-exchange reserves defending the currency. The baht then lost substantial value, and financial pressure spread across the region.

Before the crisis, countries such as Thailand, Indonesia, South Korea, and Malaysia had attracted large amounts of foreign capital. Banks and companies often borrowed in U.S. dollars while earning revenue in local currencies. When currencies weakened, the local-currency cost of repaying those debts increased sharply. Falling property and stock prices added to the strain.

The crisis was not identical in every country. Indonesia experienced severe political and economic disruption, while South Korea received an International Monetary Fund rescue package. Hong Kong defended its currency peg, and Japan was affected by wider regional weakness. The episode showed how quickly capital flows and exchange-rate pressure could connect national financial markets.