The Thai baht’s devaluation marked the beginning of the 1997 Asian financial crisis and its related stock-market turmoil.
On July 2, 1997, Thailand abandoned its fixed exchange-rate arrangement and allowed the baht to float. The currency then lost substantial value, exposing companies and financial institutions that had borrowed heavily in foreign currencies without adequate protection against exchange-rate changes.
Pressure spread quickly to other economies. Indonesia, South Korea, Malaysia, and the Philippines experienced severe currency, banking, and equity-market stress. Stock prices fell as investors reassessed corporate debt, property bubbles, current-account deficits, and the strength of financial systems across the region.
The crisis was not simply a stock-market event. Currency depreciation, debt defaults, bank failures, recession, and emergency international lending interacted with one another. The International Monetary Fund arranged major assistance programs, including a large package for South Korea.