The Thai baht was devalued in 1997, helping trigger the Asian financial crisis and a wave of market crashes. Thailand abandoned its fixed exchange-rate arrangement on July 2, 1997, allowing the baht to float after intense pressure on its foreign-exchange reserves.
Before the crisis, Thailand and other rapidly growing Asian economies had attracted large inflows of foreign capital. Banks and companies accumulated substantial foreign-currency debts, often while relying on exchange rates that appeared stable. When confidence weakened, investors withdrew funds and local currencies came under heavy selling pressure.
The crisis spread across Thailand, Indonesia, South Korea, Malaysia, and other markets. Currency collapses increased the domestic cost of dollar-denominated debt, while falling stock prices and failures among banks and companies damaged economic activity. The International Monetary Fund arranged assistance programs for several affected countries.
The baht is sometimes confused with the Indonesian rupiah or South Korean won because those currencies also suffered dramatic declines. However, Thailand’s July 1997 devaluation is widely identified as the crisis’s starting point.