The Thai baht collapsed first during the 1997 Asian financial crisis, prompting Thailand to abandon its currency peg.
On July 2, 1997, Thailand stopped defending the baht’s fixed exchange rate against the U.S. dollar and allowed it to float. Speculators had been attacking the currency, while Thailand faced large foreign debts, a property bubble, and weaknesses in its financial sector.
The baht’s devaluation rapidly spread through financial markets in East and Southeast Asia. Indonesia’s rupiah and South Korea’s won came under severe pressure, while stock markets and property markets suffered major losses. International Monetary Fund rescue programs supported several affected economies.
The crisis was not simply a stock-market crash. It combined currency collapses, banking failures, corporate debt, capital flight, and recessions. Some countries recovered relatively quickly after restructuring their financial systems, while the episode left lasting political and economic effects across the region.