Thailand’s currency crisis began the 1997 Asian financial crisis after its baht was devalued.
Thailand abandoned its fixed exchange-rate policy on July 2, 1997, allowing the baht to float. The currency then lost substantial value, and financial pressure spread across other Asian economies. Thailand had accumulated large foreign-currency debts while property and asset prices rose rapidly.
The crisis affected Indonesia, South Korea, Malaysia, and several other economies. Investors withdrew capital, companies struggled to repay dollar-denominated loans, and banks faced severe stress. The International Monetary Fund arranged rescue programs for Thailand, Indonesia, and South Korea, subject to economic conditions.
The crisis was regional rather than confined to one country. Its effects differed from place to place, but common features included weak financial supervision, short-term foreign borrowing, and exchange-rate pressures. Thailand’s baht decision is nevertheless widely used as the crisis’s starting point.