The Thai baht’s devaluation in July 1997 helped trigger the Asian financial crisis and a major regional stock-market sell-off.
Thailand abandoned its baht-dollar exchange-rate peg on July 2, 1997, allowing the currency to float. The baht then lost substantial value, and investors began questioning other Asian economies that had large foreign debts, fixed exchange rates, or vulnerable banking systems.
The pressure spread across Southeast and East Asia. Indonesia, South Korea, Malaysia, and the Philippines experienced severe financial stress, while their currencies and stock markets suffered major declines. The International Monetary Fund arranged rescue programs for several affected countries.
The crisis was not caused by one currency alone. Weak financial regulation, excessive borrowing, property bubbles, and short-term foreign capital made the region vulnerable. The baht is the canonical starting point because Thailand’s policy change set the contagion in motion.