Which currency crisis began when Thailand devalued the baht on July 2, 1997, helping trigger the Asian financial crisis?

The currency crisis that began when Thailand devalued the baht on July 2, 1997, was the 1997 Asian financial crisis.

Thailand had maintained a baht exchange rate closely linked to the U.S. dollar. After heavy speculative pressure and falling foreign-exchange reserves, the country abandoned that arrangement and allowed the baht to float. The currency immediately lost value, damaging businesses and banks with large dollar debts.

Financial stress spread through Indonesia, South Korea, Malaysia, and other economies. Stock markets plunged, currencies weakened, and several countries required international assistance. The International Monetary Fund arranged a major support program for Thailand, while South Korea and Indonesia also received rescue packages.

The crisis was not simply a stock-market event: banking weaknesses, short-term foreign borrowing, property speculation, and fixed exchange rates all played important roles. Russia’s 1998 crisis followed separately, although the two episodes were connected through global investor sentiment.