Which 1997 crisis began with Thailand’s decision to abandon its fixed exchange rate for the baht?

Thailand’s decision to abandon its fixed exchange rate for the baht began the 1997 Asian financial crisis. On July 2, 1997, the Thai government allowed the baht to float after heavy pressure on its foreign-exchange reserves.

For years, Thailand and several neighboring economies had attracted large foreign capital inflows. Banks and companies often borrowed in foreign currencies while earning revenue in local currencies, creating major risks if exchange rates moved. Property speculation, weak financial institutions, and large current-account deficits added to the vulnerability.

Currency depreciation spread through Indonesia, South Korea, Malaysia, and other markets. Stock prices fell, companies struggled with foreign-currency debts, and international rescue programs were assembled, including a major International Monetary Fund package for South Korea. The crisis was Asian in its main geography, although its market effects reached Russia and other emerging economies.