Which 1997 crisis caused stock markets across East and Southeast Asia to plunge after Thailand devalued its currency?

The Asian financial crisis caused stock markets across East and Southeast Asia to plunge after Thailand devalued its currency.

Thailand abandoned the baht’s peg to the U.S. dollar on July 2, 1997, after heavy pressure on its foreign-exchange reserves. The baht then lost substantial value, and financial stress spread to countries including Indonesia, South Korea, Malaysia, and the Philippines. Falling currencies increased the local-currency burden of dollar-denominated debts.

Stock markets declined as investors withdrew capital, companies faced refinancing problems, and banks carried large volumes of bad loans. The crisis was amplified by short-term foreign borrowing, property bubbles, weak financial supervision, and exchange-rate arrangements that proved difficult to defend.

The crisis was not limited to stock exchanges: currencies, banks, businesses, and governments were all affected. The International Monetary Fund arranged assistance programs for several countries, including Thailand, Indonesia, and South Korea. Hong Kong’s currency peg survived, although its stock market also suffered severe volatility.