The Thai baht's collapse helped define the 1997 Asian financial crisis.
On July 2, 1997, Thailand abandoned its fixed exchange-rate system and allowed the baht to float. The currency then lost substantial value, intensifying pressure on banks, businesses, and heavily indebted companies. Investors began withdrawing money from several Asian economies, and the crisis spread across the region.
Indonesia, South Korea, Malaysia, and the Philippines were among the countries affected. Stock markets fell, currencies weakened, and companies that had borrowed in foreign currencies faced sharply higher repayment costs. The International Monetary Fund arranged major assistance programs, especially for Thailand, Indonesia, and South Korea.
The baht was not the only currency involved. The Indonesian rupiah and South Korean won also suffered severe declines, which is why those currencies can appear in accounts of the crisis. The baht is the canonical answer because Thailand's devaluation is widely treated as the crisis's starting point. The episode also prompted later debates about capital flows, currency pegs, bank supervision, and regional financial cooperation.