Thailand experienced the 1997 stock-market crash commonly associated with the start of the Asian financial crisis. The crisis intensified after Thailand abandoned its fixed exchange rate for the baht on July 2, 1997.
For years, Thailand had attracted large foreign capital inflows and experienced rapid growth in property and financial markets. Many companies and banks borrowed in foreign currencies while earning income in baht. When investors became concerned about debt, asset bubbles, and the country’s ability to defend its currency, capital flowed out.
The baht’s devaluation increased the local-currency cost of foreign debts. Pressure then spread to Indonesia, South Korea, Malaysia, and other economies. Stock markets fell, currencies weakened, businesses failed, and international institutions provided support packages, including a major International Monetary Fund program for Thailand.
Thailand was the initial flashpoint, but the crisis was regional rather than confined to one country. Japan had its own banking and asset problems, while Indonesia and South Korea experienced especially severe later effects.