Which 1997 crisis began when Thailand devalued the baht and spread across East and Southeast Asian markets?

The Asian Financial Crisis began in 1997 after Thailand abandoned its fixed exchange-rate policy and allowed the baht to float on July 2. The currency fell sharply, and financial pressure spread across East and Southeast Asia.

Before the crisis, several economies had attracted large foreign-capital inflows and accumulated substantial private-sector foreign-currency debt. Fixed or tightly managed exchange rates encouraged borrowing, while property and equity markets became vulnerable to reversal. Once confidence weakened, investors withdrew funds rapidly.

Thailand, Indonesia, and South Korea were among the countries hit hardest. Stock markets fell, currencies depreciated, companies failed, and banking systems required restructuring. The International Monetary Fund arranged major assistance programs, including packages for Thailand, Indonesia, and South Korea.

The crisis is sometimes called the Asian currency crisis because exchange rates were central, but it was also a stock-market, banking, corporate-debt, and sovereign-policy crisis. Hong Kong’s market turmoil in October 1997 became one of its most visible episodes.