The Thai baht’s devaluation began the 1997 Asian financial crisis and helped trigger a major Thai stock-market crash.
Thailand abandoned the baht’s fixed exchange-rate system on July 2, 1997, allowing the currency to float. The baht then lost substantial value. Investors had become concerned about Thailand’s large current-account deficit, heavy foreign borrowing, and a property and financial-sector boom.
The crisis spread across East and Southeast Asia. Indonesia, South Korea, Malaysia, and the Philippines experienced severe currency and market pressure, while companies and banks struggled with foreign-currency debts. International support programs, including a large International Monetary Fund package for Thailand, followed.
The crisis is sometimes called the Asian financial crisis, although its effects differed from country to country. It was not simply a stock-market event: exchange-rate regimes, banking weaknesses, corporate leverage, and sudden capital outflows all played important roles.