The Thai baht was the currency whose devaluation helped trigger the 1997 Asian financial crisis.
Thailand had maintained a managed exchange rate while borrowing heavily in foreign currencies. Rapid credit growth, property speculation, current-account deficits, and doubts about the sustainability of the baht’s exchange-rate policy placed increasing pressure on the country’s reserves.
On 2 July 1997, Thailand abandoned its fixed exchange-rate arrangement and allowed the baht to float. The currency depreciated sharply, and investors began reassessing risks throughout the region. Financial stress spread to Indonesia, South Korea, Malaysia, and other economies through currency markets, banks, companies, and capital flows.
The crisis was not caused by one identical problem in every country. Some economies had weak banks, some had large foreign-currency debts, and others faced sudden reversals of international investment. The International Monetary Fund arranged assistance programs for several affected countries. The baht event is separate from Britain’s 1992 ERM crisis and from the later Russian default, though global investors connected the episodes.