The Thai baht's devaluation triggered the 1997 Asian financial crisis and the related wave of regional market crashes. Thailand abandoned its fixed exchange-rate policy on July 2, 1997, allowing the baht to fall sharply.
Before the crisis, Thailand and other Asian economies had attracted large amounts of foreign capital. Banks and companies accumulated substantial foreign-currency debts, while property and equity prices rose rapidly. Once investors lost confidence, capital flowed out and currencies, banks, and stock markets came under severe pressure.
The crisis spread to Indonesia, South Korea, Malaysia, and other economies. The International Monetary Fund organized major assistance programs, especially for Thailand, Indonesia, and South Korea. The baht's devaluation was the trigger, but weak financial systems, excessive borrowing, and inadequate currency-risk management made the effects much wider.