Which currency crisis triggered the 1997 Asian financial crisis and helped crash stock markets across the region?

The devaluation of Thailand’s baht triggered the 1997 Asian financial crisis and helped crash stock markets across the region.

Thailand abandoned its fixed exchange-rate policy on July 2, 1997, allowing the baht to float after intense pressure from currency speculators and dwindling foreign-exchange reserves. The baht then lost substantial value, making dollar-denominated debts much more expensive for Thai companies and banks.

Investors reassessed other Asian economies that had similar exchange-rate systems, high corporate borrowing, and large foreign-capital inflows. Pressure spread to Indonesia, South Korea, Malaysia, and other markets. Equity prices fell sharply, currencies weakened, and several financial institutions and companies failed.

The crisis was regional but had worldwide consequences. The International Monetary Fund organized rescue programs for Thailand, Indonesia, and South Korea. A common mistake is to describe the episode as beginning with a stock-market fall; the baht’s forced devaluation was the crucial opening event.