Thailand experienced the first major currency devaluation of the 1997 Asian financial crisis.
On July 2, 1997, Thailand abandoned its fixed exchange-rate policy for the baht and allowed the currency to float. The baht then fell sharply, helping turn a national financial problem into a regional crisis.
Before the devaluation, Thailand had attracted large foreign capital inflows and accumulated substantial short-term foreign-currency debt. A property and credit boom weakened, while investors questioned whether the central bank could continue defending the baht's exchange rate.
The pressure spread to Indonesia, South Korea, Malaysia, and other economies through currency declines, debt problems, falling stock markets, and capital flight. The International Monetary Fund organized assistance programs, although the conditions attached to them remain debated. The crisis also encouraged many Asian governments to build larger foreign-exchange reserves.