Thailand was the starting point of the 1997 Asian financial crisis and its associated stock-market turmoil. Pressure on Thailand’s financial system intensified after years of rapid borrowing, property speculation, and dependence on foreign capital.
On July 2, 1997, Thailand abandoned its fixed exchange-rate policy for the baht and allowed the currency to float. The baht then lost substantial value, and concerns about banks, companies, and foreign-currency debts spread across the region. Stock markets in several Asian economies fell sharply as investors reassessed risk.
The crisis did not remain confined to Thailand. Indonesia, South Korea, Malaysia, and other economies were affected, while international institutions provided assistance to some governments. Thailand is the correct starting point, but Indonesia and South Korea experienced some of the crisis’s most severe economic consequences. The crisis also contributed to a wider reassessment of fixed exchange rates and short-term capital flows.