The Thai baht was devalued on July 2, 1997, triggering the Asian financial crisis.
Thailand had maintained a managed exchange rate that closely tied the baht to the U.S. dollar. After heavy speculation and a decline in foreign-exchange reserves, the country abandoned its fixed exchange-rate policy and allowed the baht to float. Its value then dropped sharply.
The pressure spread through economies that had large foreign debts, fragile banks, or similarly managed currencies. Indonesia, South Korea, Malaysia, and the Philippines were among the countries hit hardest. Stock markets fell, companies struggled to repay dollar-denominated loans, and several governments required international assistance.
The International Monetary Fund assembled rescue packages for Thailand, Indonesia, and South Korea. The crisis also encouraged many Asian economies to build larger foreign-exchange reserves and strengthen financial regulation. Although often called a currency crisis, its effects extended into banking, corporate debt, employment, and politics.