The Thai baht’s collapse helped ignite the Asian financial crisis in 1997.
Thailand had maintained a de facto peg between the baht and the U.S. dollar while borrowing heavily in foreign currencies. As investors questioned Thailand’s reserves and financial stability, speculators sold the baht. On July 2, 1997, Thailand allowed the currency to float, and it rapidly lost value.
The pressure spread across Asia because banks, companies, and investors were connected through regional trade and finance. Indonesia, South Korea, Malaysia, and other economies experienced currency falls, stock-market declines, corporate failures, and recession. The International Monetary Fund arranged major assistance programs, including a package for Thailand. The crisis was not simply a stock-market event: currency mismatches, short-term foreign debt, weak financial regulation, and fixed exchange rates all mattered. The baht is therefore the specific currency associated with the crisis’s initial break, not the currencies that suffered later.