Thailand’s currency crisis triggered a major stock-market collapse across East and Southeast Asia in 1997.
On July 2, 1997, Thailand abandoned its fixed exchange-rate system and allowed the baht to float after intense pressure on its foreign-exchange reserves. The baht then lost substantial value. Investors reassessed other economies with large foreign debts, fixed or managed exchange rates, and vulnerable financial sectors.
The crisis spread to Indonesia, South Korea, Malaysia, and the Philippines, while financial markets elsewhere also felt its effects. Stock prices fell, currencies depreciated, companies failed, and several governments sought assistance from the International Monetary Fund. Hong Kong’s currency peg survived, but its stock market suffered a steep decline.
Thailand was the starting point of the Asian financial crisis, but it was not the only country severely affected. Japan had its own banking and asset-price problems, while China avoided a currency devaluation during the main crisis period.