What happened
On July 2, 1997, after exhausting much of its reserves defending the baht’s dollar peg against speculative attacks, the Bank of Thailand floated the currency. The baht lost roughly half its value against the dollar within months, and the crisis spread across Asia — Indonesia and South Korea were hardest hit — becoming the Asian financial crisis, known in Thailand as the Tom Yum Kung crisis.
Background
By the standard account, years of boom financed by heavy short-term dollar borrowing, a property bubble, an export slowdown in 1996 and failures among finance companies had strained the pegged exchange rate.
Consequences
An IMF-led rescue package of about 17.2 billion US dollars followed in August 1997, with austerity and restructuring conditions. Thailand fell into a deep recession in 1998 as the economy shrank sharply, and dozens of finance companies were closed. The Chavalit government fell in November 1997. Recovery took hold in the early 2000s, and the crisis reshaped debate about capital flows and IMF prescriptions.