Which 1997 crisis began in Thailand when the baht was devalued after a fixed exchange-rate defense failed?

The 1997 crisis that began in Thailand after the baht’s devaluation was the 1997 Asian financial crisis.

Thailand had maintained a currency arrangement that closely linked the baht to the U.S. dollar. Heavy borrowing, property speculation, current-account deficits, and weakening export competitiveness made the arrangement increasingly difficult to defend. After intense pressure on foreign-exchange reserves, Thailand allowed the baht to float on July 2, 1997.

The baht’s fall became a regional financial crisis. Investors withdrew capital from other Asian economies, currencies depreciated, stock markets plunged, and companies with large foreign-currency debts faced serious repayment problems. Indonesia and South Korea were among the countries hit particularly hard.

The International Monetary Fund provided assistance packages to several affected economies, often with conditions involving fiscal, monetary, and structural reforms. The crisis was centered in Asia, while Russia’s separate 1998 crisis followed afterward and involved its own debt and currency problems.