The Thai baht was devalued at the start of the 1997 Asian financial crisis, helping trigger regional market crashes.
Thailand had maintained a relatively fixed exchange rate against the U.S. dollar, while borrowing and property speculation expanded rapidly. As investors questioned whether the peg could survive, pressure mounted on Thailand’s foreign-exchange reserves. On July 2, 1997, the government allowed the baht to float, and its value fell sharply.
The currency shock spread through financial markets across East and Southeast Asia. Investors began withdrawing capital from countries they viewed as similarly vulnerable. Indonesia, South Korea, Malaysia, and other economies experienced currency depreciation, falling stock prices, banking stress, or recession.
The crisis was not caused by one currency alone. Heavy foreign-currency borrowing, weak financial regulation, property bubbles, and large current-account deficits made several economies exposed. The International Monetary Fund organized assistance programs for Thailand, Indonesia, and South Korea, often with conditions involving fiscal and financial reforms. The baht is nevertheless widely identified as the crisis’s starting point.