The Asian financial crisis began with Thailand abandoning its fixed exchange-rate system in 1997.
Thailand had maintained the baht’s value within a narrow range, but heavy borrowing, property speculation, and pressure from currency traders weakened the arrangement. On July 2, 1997, Thailand allowed the baht to float, and it then depreciated sharply.
Financial stress spread across East and Southeast Asia. Indonesia, South Korea, and other economies faced capital flight, falling currencies, corporate failures, and plunging stock markets. The crisis also affected Russia and contributed to turbulence in global financial markets.
The International Monetary Fund organized assistance packages for several countries, including Thailand, Indonesia, and South Korea. The crisis exposed risks from short-term foreign-currency borrowing and weak banking supervision, and it encouraged many Asian governments to build larger foreign-exchange reserves.