Thailand’s baht devaluation in July 1997 helped trigger the Asian financial crisis and regional stock-market crashes.
On July 2, 1997, Thailand abandoned its fixed exchange-rate policy and allowed the baht to float. The currency then fell sharply. Investors had become concerned about Thailand’s current-account deficit, heavy foreign borrowing, weak financial institutions, and property-market problems.
The loss of confidence spread rapidly across East and Southeast Asia. Indonesia, South Korea, and Malaysia experienced severe currency and financial-market stress, while stock prices plunged in several countries. International Monetary Fund assistance programs were arranged for Thailand, Indonesia, and South Korea, with conditions aimed at stabilizing their economies.
The crisis was not simply a stock-market event. Currency devaluations, corporate debt, banking failures, and capital flight reinforced one another. Thailand’s policy change is widely treated as the starting point, although vulnerabilities had accumulated across the region before that date.