Which crisis began when Thailand devalued the baht on July 2, 1997?

The Asian financial crisis began when Thailand devalued the baht on July 2, 1997. Thailand had maintained a managed exchange rate, but pressure from falling reserves and speculative attacks forced the government to abandon the baht’s dollar peg.

The crisis spread across East and Southeast Asia. Indonesia, South Korea, and several other economies experienced currency collapses, banking failures, recessions, and sharp declines in stock-market values. International investors withdrew capital rapidly, worsening the financial pressure.

The International Monetary Fund organized assistance programs for Thailand, Indonesia, and South Korea. These programs included loans and financial reforms, although the conditions attached to them remain a subject of debate among economists.

The baht’s devaluation was the trigger, not the only underlying cause. Large foreign-currency debts, weak financial regulation, property-market speculation, and excessive short-term borrowing made several countries vulnerable.