Thailand’s currency devaluation is widely viewed as the starting point of the 1997 Asian financial crisis.
On July 2, 1997, Thailand abandoned its defense of the baht’s exchange rate and allowed the currency to float. The baht then fell sharply, exposing weaknesses in Thailand’s financial system and alarming international investors.
The crisis spread through several Asian economies, including Indonesia, South Korea, Malaysia, and the Philippines. Common vulnerabilities included large foreign-currency debts, weak banks, property speculation, and exchange-rate systems that encouraged borrowing in dollars.
The International Monetary Fund organized rescue programs for several affected countries. Thailand’s experience is often confused with Indonesia’s later, extremely severe currency collapse, but Thailand was the first major trigger generally identified in accounts of the regional crisis.