On July 2, 1997, Thailand got rid of its pegged currency system, which quickly devalued the Thai baht. Up until that time, the baht was pegged at 25 to US$1.

Year Peg
1963-1973 20.8 baht = US$1
1973-1978 20 baht = US$1
1978-1984 Pegged to basket of currencies
1984-1997 25 baht = US$1
July 2, 1997 Managed float

Pressure on the emerging foreign exchange markets had begun during May and June of 1997. Thailand had spent billions of dollars in May, with Singapore's intervention, attempting to defend the baht against speculative trades. Once allowed to float, the baht quickly fell 20%, and by January of 1998 it reached 55 baht per US$1. The Malaysian ringgit and Philippine peso also started to feel the pressure from currency speculators - and the Asian financial crisis had begun.

Two weeks later, the International Monetary Fund used its "emergency funding mechanism" for the first time, making over $1 billion available to the Philippines. As a result of the crisis, many countries enacted measures to protect the stability of their own currency. It has become a well -documented crisis, studied by economists in regards to national accounts management and currency speculation. (For more, see What Causes A Currency Crisis?)

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