Which 1997 financial crisis began after Thailand devalued the baht and triggered stock-market turmoil across Asia?

The Asian financial crisis began in 1997 after Thailand devalued the baht, setting off turmoil across regional currencies and stock markets.

Thailand abandoned its fixed exchange-rate policy on July 2, 1997, after heavy pressure on its foreign-exchange reserves. Investors then questioned the stability of other economies with high foreign-currency debt, weak financial institutions, and property-market speculation. Capital rapidly left several Asian markets.

The crisis spread to Indonesia, South Korea, Malaysia, and the Philippines, among others. Falling currencies made dollar-denominated debts harder to repay, while collapsing asset prices damaged banks and businesses. International Monetary Fund programs provided assistance to several affected countries, although their conditions were controversial.

The episode was not simply a stock-market crash. Currency devaluations, banking failures, corporate debt, and equity-market declines reinforced one another. Hong Kong’s market suffered a major sell-off in October 1997, but its currency peg survived. The crisis also encouraged many Asian governments to build larger foreign-exchange reserves afterward.