Thailand’s currency crisis began the 1997 Asian financial crisis after the country abandoned the baht’s peg to the U.S. dollar.
Thailand allowed the baht to float on July 2, 1997, after intense speculative pressure depleted the country’s foreign-exchange reserves. The baht then lost substantial value, exposing weaknesses in heavily indebted banks, companies, and property markets.
The crisis spread across East and Southeast Asia. Indonesia, South Korea, Malaysia, and other economies experienced currency collapses, falling stock markets, corporate failures, and emergency international lending. The International Monetary Fund arranged major assistance programs, including one for Thailand.
The crisis is often called the Asian financial crisis, but its first decisive currency break occurred in Thailand. It was not simply a stock-market event: exchange-rate regimes, foreign-currency debt, financial-sector fragility, and capital outflows all played major roles.