Thailand floated the Thai baht on July 2, 1997, helping trigger the Asian financial crisis.
Before the decision, Thailand had maintained a managed exchange rate closely linking the baht to the U.S. dollar. Speculative pressure, falling foreign-exchange reserves, heavy private borrowing, and weaknesses in Thailand’s financial sector made that arrangement increasingly difficult to defend.
After the baht was allowed to float, it depreciated sharply. Investors then reassessed other Asian economies with large foreign debts, fixed or managed exchange rates, and vulnerable banks. Pressure spread to Indonesia, South Korea, Malaysia, and other markets, producing severe currency, stock-market, and banking turmoil.
The baht was the initial currency at the crisis’s widely recognized starting point, but it was not the only currency affected. The International Monetary Fund later organized rescue programs for several countries, with conditions involving financial and economic reforms.