July 2, 1997 marked the beginning of the 1997 Asian financial crisis when Thailand abandoned its baht peg.
Thailand had maintained a largely fixed exchange rate between the baht and the U.S. dollar. After pressure from speculative attacks and declining foreign-exchange reserves, Thai authorities allowed the currency to float on July 2, 1997. The baht then depreciated sharply, and financial stress spread through regional economies.
The crisis affected Thailand, Indonesia, South Korea, Malaysia, and other markets. Stock exchanges fell, companies and banks struggled with foreign-currency debts, and international investors rapidly withdrew capital. The International Monetary Fund organized assistance programs for several countries, including Thailand, Indonesia, and South Korea.
The event was not solely a stock-market crash: it was also a currency, banking, and sovereign-debt crisis. Thailand’s baht decision is used as the conventional starting point because it exposed vulnerabilities involving short-term foreign borrowing, property speculation, weak financial supervision, and fixed exchange rates.