The Thai baht's devaluation on July 2, 1997, triggered the Asian financial crisis and contributed to major stock-market falls across the region. Thailand abandoned its fixed exchange-rate policy after pressure on its foreign-currency reserves became unsustainable.
The baht had been effectively tied to the U.S. dollar, while Thailand accumulated substantial foreign debt and experienced a property and credit boom. When investors lost confidence, they sold baht and Thai assets. The currency was allowed to float and quickly lost value.
Financial stress spread to Indonesia, South Korea, Malaysia, and other economies through currency speculation, debt exposure, and investor withdrawals. Stock exchanges fell sharply, businesses faced rising foreign-currency liabilities, and several governments sought international assistance.
The crisis was not simply a stock-market crash: it combined currency collapses, banking problems, corporate debt, and falling asset prices. The International Monetary Fund announced a rescue program for Thailand in August 1997, while Indonesia and South Korea later received major support packages.