Thailand’s currency collapse triggered the first major phase of the 1997 Asian financial crisis.
On July 2, 1997, Thailand abandoned its defense of the baht’s fixed exchange-rate system and allowed the currency to float. The baht then depreciated sharply, after years of heavy borrowing, property speculation, and pressure on foreign reserves.
Financial stress spread across East and Southeast Asia. Indonesia, South Korea, Malaysia, and other economies experienced currency declines, banking problems, falling asset prices, or recessions. International Monetary Fund rescue programs were arranged for several countries, including Thailand, Indonesia, and South Korea.
The crisis was not simply a stock-market crash: it combined exchange-rate, banking, debt, and equity-market shocks. Thailand is the specific answer because the baht’s float marked the crisis’s widely recognized starting point, while other countries suffered some of its most severe later consequences.