Thailand devalued its baht on July 2, 1997, marking the start of the Asian financial crisis.
Thailand had maintained a de facto peg linking the baht to a basket of currencies, largely reflecting the U.S. dollar. Heavy borrowing, property speculation, weak financial institutions, and pressure from currency speculators made the arrangement increasingly difficult to defend. On July 2, authorities abandoned the baht’s fixed exchange-rate system and allowed it to float, producing a sharp devaluation.
The crisis then spread through Southeast and East Asia. Indonesia, South Korea, Malaysia, and other economies experienced currency collapses, banking problems, recession, and stock-market losses. The International Monetary Fund supplied assistance to several countries, including Thailand, Indonesia, and South Korea, with loan programs tied to economic reforms. The episode is often called the Asian financial crisis, although its initial currency break occurred specifically in Thailand.