Thailand’s currency collapse gave the 1997 Asian financial crisis its most famous early flashpoint.
Thailand maintained the baht’s value against a basket dominated by the U.S. dollar. Speculators attacked the currency after years of rapid borrowing, property and equity speculation, and growing current-account problems. On July 2, 1997, the government abandoned the peg and allowed the baht to float.
The baht’s devaluation quickly spread through financial markets. Investors withdrew capital from other Asian economies, and currencies, banks, and companies came under pressure. Indonesia, South Korea, and Malaysia were among the countries hit particularly hard, though the effects varied by country.
The International Monetary Fund arranged a support program for Thailand, while other governments adopted emergency measures. The crisis caused recessions, bankruptcies, and political upheaval across the region. It is sometimes described simply as a stock-market crash, but it was broader: exchange-rate collapses, debt stress, banking failures, and falling asset prices reinforced one another.