Thailand’s stock exchange suffered the first major crash of the 1997 Asian financial crisis. The crisis began after pressure on Thailand’s currency and financial system intensified in 1997.
Thailand had maintained the baht within a managed exchange-rate system while borrowing heavily in foreign currencies. Property speculation, weak financial institutions, and large short-term debts made the economy vulnerable when investors began to withdraw funds.
The Thai government eventually allowed the baht to float on July 2, 1997. Its sharp depreciation increased the domestic burden of foreign-currency debt and helped spread financial stress across East and Southeast Asia.
Indonesia, South Korea, Malaysia, and other economies were subsequently affected. International Monetary Fund programs, banking reforms, recessions, and political changes followed in several countries, making the episode a regional rather than purely Thai crisis.