The Thai baht was devalued in July 1997, setting off the Asian financial crisis.
Thailand had maintained a close link between the baht and the U.S. dollar. Speculators attacked the currency after concerns grew about Thailand's current-account deficit, property-market weakness, and heavy short-term foreign borrowing. On July 2, 1997, the government abandoned its defense of the baht and allowed it to float.
The baht then lost substantial value, increasing the local cost of dollar-denominated debts. Financial stress spread across East and Southeast Asia. Indonesia, South Korea, Malaysia, and the Philippines experienced severe currency, banking, and stock-market turmoil, although each country had different vulnerabilities.
The crisis was not simply a stock-market event. Currency devaluations weakened companies and banks, while falling asset prices and capital outflows reinforced one another. The International Monetary Fund arranged assistance programs for several affected economies. Thailand's baht is the standard starting point because its float marked the crisis's most widely recognized opening event.