Thailand’s currency began the 1997 Asian financial crisis when it was devalued on July 2.
The currency was the baht, which had been managed against the U.S. dollar. After prolonged pressure from currency speculation and falling confidence, Thailand abandoned its exchange-rate support and allowed the baht to float. It then lost substantial value.
The crisis spread through financial and trade links. Indonesia, South Korea and Malaysia were among the economies hit hardest, while stock markets and currencies across East and Southeast Asia fell. Companies and banks with large foreign-currency debts became especially vulnerable because repayment costs rose in local-currency terms.
The International Monetary Fund organized assistance programs for several affected countries, including Thailand, Indonesia and South Korea. The episode encouraged later reforms involving bank supervision, foreign-exchange reserves and the management of short-term capital flows. The crisis is sometimes called the Asian financial crisis, although its initial currency break occurred in Thailand.