Thailand’s devaluation of the baht helped launch the 1997 Asian financial crisis.
On July 2, 1997, Thailand abandoned its long-standing fixed exchange-rate arrangement and allowed the baht to float. The currency then fell sharply, revealing weaknesses built up during years of rapid borrowing, property speculation, and large foreign-currency debts.
Financial pressure spread across Asia as investors reassessed other economies with fixed exchange rates, fragile banks, and heavy short-term borrowing. Indonesia, South Korea, and Malaysia were among the countries hit severely. Stock markets and currencies declined, while businesses struggled to repay debts denominated in foreign currencies.
The International Monetary Fund organized assistance programs for several affected countries, including Thailand, Indonesia, and South Korea. The crisis produced recessions and political changes in parts of the region, but it also encouraged later reforms in banking supervision, reserve management, and corporate finance.