Thailand began the 1997 Asian financial crisis after devaluing its baht on July 2, 1997.
For years, Thailand had maintained a largely fixed exchange rate between the baht and the U.S. dollar. Rapid borrowing, property speculation, large current-account deficits, and pressure on foreign-exchange reserves made that policy increasingly difficult to defend. Speculators sold the baht, forcing the authorities to abandon its peg and allow a major devaluation.
The currency move quickly became a regional financial shock. Investors withdrew funds from several Asian economies, stock markets plunged, and banks and companies faced severe foreign-currency debts. Indonesia, South Korea, Malaysia, and the Philippines were among the countries affected, though the consequences differed from country to country.
The International Monetary Fund organized assistance programs for Thailand and other economies. The crisis led to recessions, corporate failures, political upheaval, and renewed debate about fixed exchange rates and short-term international capital flows.