Which 1997 crisis began when Thailand devalued its baht and spread through East Asian stock markets?

The 1997 crisis that began with Thailand’s baht devaluation and spread across East Asian markets was the Asian financial crisis. On 2 July 1997, Thailand abandoned its fixed exchange-rate policy after exhausting foreign-currency reserves, causing the baht to fall sharply. Investors then reassessed other economies with large foreign debts, property bubbles or pegged currencies.

Currencies and stock markets in Indonesia, South Korea and Malaysia came under intense pressure. Indonesia’s rupiah lost much of its value, while Korean conglomerates and banks faced severe financing problems. The International Monetary Fund organized rescue packages for Thailand, Indonesia and South Korea, generally tied to fiscal and financial reforms.

Hong Kong’s currency peg survived, but its stock market suffered a dramatic October 1997 sell-off. Russia and Brazil later experienced related market stress, though their crises had distinct domestic causes. The episode showed how quickly capital flows and investor confidence could transmit turmoil across borders.