Thailand’s currency crisis was the immediate trigger of the 1997 Asian financial crisis. On 2 July 1997, Thailand abandoned its defense of the baht’s dollar peg and allowed the currency to float after intense speculative pressure.
The baht’s devaluation exposed weaknesses that also existed elsewhere, including heavy foreign-currency borrowing, property speculation, fragile banks, and large short-term capital inflows. Investors then reassessed other economies in the region, causing sharp currency falls, stock-market declines, and corporate failures.
The crisis spread to Indonesia, South Korea, Malaysia, and other economies. International Monetary Fund programs supported several affected countries, although the required reforms were controversial. The event is called the Asian financial crisis, but it began in Thailand rather than in every affected market at the same time.