Thailand’s currency was devalued after the 1997 Asian financial crisis began with pressure on its stock market and exchange rate.
Thailand abandoned the baht’s exchange-rate peg to the U.S. dollar on July 2, 1997, allowing the currency to float. The baht then fell sharply, and financial stress spread through banks, property companies, and heavily indebted businesses. Thailand’s stock market had already weakened as investors questioned the sustainability of credit-fueled growth.
The crisis spread across East and Southeast Asia. Indonesia, Malaysia, South Korea, and other economies faced capital flight, falling currencies, banking problems, and emergency reforms. The International Monetary Fund organized a major assistance program for Thailand, later followed by programs for Indonesia and South Korea.
The crisis is often called the Asian financial crisis, but its first decisive currency break was in Thailand. It was not simply a stock-market crash: exchange-rate regimes, foreign-currency borrowing, weak financial supervision, and rapid international capital movements all played important roles.