The Thai baht was devalued in July 1997 at the start of the Asian financial crisis and the associated stock-market crashes.
For years, Thailand had maintained a near-fixed exchange rate between the baht and the U.S. dollar. Thai companies and financial institutions borrowed heavily in dollars, while property and equity prices rose rapidly. As doubts about Thailand’s economy increased, investors sold baht and demanded foreign currency.
Thailand spent much of its foreign-exchange reserves defending the currency. On July 2, 1997, the government abandoned the fixed exchange-rate system and allowed the baht to float. Its sharp decline increased the local-currency cost of dollar debts and weakened banks and businesses.
The pressure quickly spread across East and Southeast Asia. Indonesia, South Korea and Malaysia experienced currency falls, banking problems and stock-market losses. The crisis was not simply a stock-market event: exchange-rate regimes, foreign borrowing, property speculation and fragile financial institutions all played important roles. The baht is the clearest single answer because Thailand was the initial flashpoint.