The Thai baht’s devaluation began the 1997 Asian financial crisis and its associated stock-market crash.
Thailand abandoned its fixed exchange-rate policy on July 2, 1997, allowing the baht to float after intense pressure from currency speculators. The currency then lost substantial value. Investors reassessed other Asian economies with high foreign-currency debts, property bubbles, weak banking systems, or similar exchange-rate arrangements.
The shock spread rapidly through Thailand, Indonesia, South Korea, Malaysia, and the Philippines. Equity markets plunged, companies struggled to repay dollar-denominated loans, and several economies required international assistance. The International Monetary Fund organized major rescue programs, including one for South Korea.
The baht is sometimes confused with the Indonesian rupiah or South Korean won because those currencies also collapsed during the crisis. However, Thailand’s decision to float the baht is the accepted starting point of the regional crisis. The episode showed how quickly currency stress could transmit into banks, companies, and stock exchanges.