Thailand devalued its baht on July 2, 1997, helping start the Asian financial crisis and regional market crashes.
For years, Thailand had maintained a managed exchange rate that kept the baht closely linked to the U.S. dollar. Heavy borrowing, property speculation, current-account deficits, and pressure on foreign-exchange reserves made that arrangement increasingly difficult to defend. After sustained attacks on the currency, Thai authorities abandoned the peg and allowed the baht to float.
The devaluation damaged businesses and banks that had borrowed in foreign currencies. Contagion then spread to Indonesia, South Korea, Malaysia, and other economies, where currencies, share prices, and property markets fell. The crisis also led to emergency support programs involving the International Monetary Fund.
Thailand’s currency move is often described as the starting point of the crisis, but the regional collapse had broader structural causes. It was not simply a currency event: banking weakness, short-term foreign debt, and speculative excess magnified the stock-market damage.