Thailand’s currency collapse began the Asian financial crisis of 1997.
On July 2, 1997, Thailand abandoned its fixed exchange-rate policy and allowed the baht to float after intense pressure from currency speculators and dwindling foreign-exchange reserves. The baht then lost substantial value, making dollar-denominated debts much more expensive for Thai companies and banks.
Financial stress spread across East and Southeast Asia. Indonesia, South Korea, Malaysia, and the Philippines experienced severe currency and stock-market pressure, while banks and corporations struggled with foreign-currency liabilities. The International Monetary Fund arranged assistance programs, including a major package for Thailand. The crisis was not simply a stock-market event: exchange rates, banking systems, property booms, and international capital flows were tightly connected. A frequent mistake is identifying South Korea as the starting point; Korea was among the later major economies hit during the regional contagion.