Which 1997 crisis spread after Thailand abandoned its baht peg to the U.S. dollar?

Thailand’s decision to abandon its baht peg helped trigger the 1997 Asian financial crisis.

On July 2, 1997, Thailand allowed the baht to float after spending large amounts of foreign currency trying to defend its exchange rate. The baht then depreciated sharply, and financial pressure spread to other economies that had large foreign-currency debts, overvalued assets, weak banks, or fixed exchange-rate arrangements.

Indonesia, South Korea, Malaysia, and the Philippines were among the countries heavily affected. Stock markets and currencies fell, businesses failed, and several governments sought assistance from the International Monetary Fund. Hong Kong’s market also came under severe pressure, although its currency peg survived. The crisis was not simply a stock-market event: it involved currencies, banks, corporate borrowing, and sovereign policy. It is called the Asian financial crisis because the shock moved through several Asian economies rather than remaining a problem confined to Thailand.