The Thai baht collapsed in value at the start of the 1997 Asian financial crisis.
Thailand had maintained a close link between the baht and the U.S. dollar while accumulating large foreign-currency debts. Speculators increasingly doubted that the country could defend the exchange rate. On July 2, 1997, Thailand allowed the baht to float, and it rapidly lost value.
The crisis then spread through financial and currency markets across East and Southeast Asia. Indonesia, South Korea, Malaysia, and the Philippines experienced severe pressure, although each economy had different vulnerabilities. Falling currencies made dollar-denominated debts more expensive to repay, damaging banks and businesses.
The International Monetary Fund organized assistance programs for several affected countries, including Thailand, Indonesia, and South Korea. The episode is often called an Asian financial crisis, but it began as a currency and financial shock rather than a single worldwide stock-market crash. Stock indexes fell sharply as investors reassessed regional risks.