Which 1997 financial crisis began with the collapse of Thailand’s baht peg?

The 1997 Asian financial crisis began when Thailand abandoned its baht peg to the U.S. dollar.

Thailand had maintained a fixed exchange-rate arrangement while borrowing heavily in foreign currencies. Speculators came under pressure from falling export growth, rising private debt, and concerns about the country’s ability to defend the baht. On July 2, 1997, Thailand let the currency float, and it depreciated sharply.

Financial stress then spread across East and Southeast Asia. Indonesia, South Korea, and Malaysia experienced currency falls, capital flight, banking problems, and stock-market declines. International institutions, especially the International Monetary Fund, supported several affected economies through assistance programs tied to policy conditions.

The crisis did not affect every Asian economy in the same way, and Japan’s later stagnation was not simply another name for it. The episode is commonly called the Asian financial crisis, although its consequences extended into global markets and influenced debates about exchange-rate regimes and short-term foreign borrowing.