The Thai baht was forced out of Thailand’s fixed exchange-rate system during the 1997 Asian financial crisis.
On July 2, 1997, Thailand allowed the baht to float after spending foreign-exchange reserves defending its peg to the US dollar. The currency then depreciated sharply, helping trigger a regional crisis that spread through Southeast and East Asia.
Thailand had experienced rapid credit growth, heavy foreign borrowing, property speculation, and weaknesses in its financial sector. When confidence broke, investors withdrew capital and pressure moved to other currencies and stock markets. Indonesia, South Korea, Malaysia, and several other economies were affected, although the timing and severity differed.
The baht is sometimes confused with the rupiah or won because all became major crisis currencies. The International Monetary Fund approved a large assistance package for Thailand, tied to reforms and fiscal and financial measures. The crisis eventually prompted stronger reserves, banking changes, and new regional financial cooperation.