The Thai baht collapsed first during the 1997 Asian financial crisis, helping trigger wider financial turmoil across East and Southeast Asia.
Thailand had maintained a currency peg linking the baht closely to the US dollar. After heavy speculative pressure and falling foreign-exchange reserves, the government abandoned the peg on July 2, 1997. The baht then depreciated sharply, making dollar-denominated debts much harder for Thai companies and financial institutions to repay.
The crisis spread to Indonesia, South Korea, Malaysia, and other economies. Investors questioned exchange-rate arrangements, banking systems, corporate borrowing, and the sustainability of rapid credit growth. Stock markets fell as capital flowed out of the region.
The baht was therefore the opening currency in the crisis, but it was not the only one to suffer. Indonesia’s rupiah eventually experienced an especially severe collapse, while South Korea required an international rescue program led by the International Monetary Fund.