Thailand's currency devaluation triggered the 1997 Asian financial crisis.
On July 2, 1997, Thailand abandoned its long-standing peg between the baht and the U.S. dollar and allowed the currency to float. The baht then lost substantial value, helping set off financial turmoil across East and Southeast Asia.
Before the crisis, several economies had attracted large foreign-capital inflows and accumulated significant foreign-currency debts. Property and equity markets had also risen sharply. When confidence weakened, investors withdrew funds, currencies fell, and companies and banks struggled to repay dollar-denominated loans.
The crisis spread to Indonesia, South Korea, Malaysia, and other economies, although each country had different vulnerabilities. The International Monetary Fund arranged assistance programs for several affected countries. Thailand's devaluation is the conventional starting point, but it was not the only cause: weak financial regulation, excessive borrowing, and fixed exchange-rate pressures also mattered.