Which currency's collapse started the 1997 Asian financial crisis?

The collapse of the Thai baht started the 1997 Asian financial crisis. On July 2, 1997, Thailand abandoned its defense of the baht’s peg to the U.S. dollar and allowed the currency to float, triggering a rapid devaluation.

Thailand had experienced years of fast growth financed partly by foreign capital and short-term borrowing. Banks and companies accumulated substantial foreign-currency debts while the baht remained effectively tied to the dollar. Speculative attacks in May 1997 forced the Bank of Thailand to spend large amounts of foreign reserves defending the peg.

Once those reserves became insufficient, the government floated the baht. The currency quickly lost more than half its value, damaging borrowers with dollar-denominated debts and undermining financial institutions. Investor panic then spread through Southeast Asia, affecting Indonesia, Malaysia, the Philippines, South Korea, and others.

The Indonesian rupiah and Korean won suffered enormous later declines, but neither initiated the regional crisis. The Japanese yen was also involved in the broader economic background, yet it was not the currency whose collapse set off the chain reaction.