Thailand’s devaluation of the baht began the 1997 Asian financial crisis and triggered major regional market turmoil.
On July 2, 1997, Thailand abandoned its fixed exchange-rate policy and allowed the baht to float. The currency fell sharply after years of credit expansion, property speculation, large current-account deficits, and pressure on Thailand’s foreign-exchange reserves. Investors then reassessed other Asian economies with similar vulnerabilities.
The crisis spread across Southeast and East Asia, affecting Indonesia, South Korea, Malaysia, and several other markets. International Monetary Fund assistance programs helped some countries stabilize their finances, though the required reforms were politically and socially painful. A common mistake is to identify Indonesia or South Korea as the starting point: both suffered severe effects, but Thailand was where the crisis began.