The Russian ruble was sharply devalued before Russia's stock market plunged during the 1998 Russian financial crisis.
Russia widened the ruble's trading band and effectively devalued the currency on August 17, 1998. The government also announced a moratorium on some foreign debt payments and restructured domestic debt. These measures followed falling oil prices, weak tax collection, political uncertainty, and the financial strain left by the 1997 Asian crisis.
The ruble lost much of its value, banks failed or were severely weakened, and Russian equities suffered an extraordinary collapse. The crisis spread beyond Russia through investor losses and concerns about emerging-market debt. Long-Term Capital Management, a highly leveraged U.S. hedge fund, also faced danger soon afterward, prompting a private-sector rescue organized by the Federal Reserve Bank of New York.
The ruble was not replaced at the time; it remained Russia's currency. The later redenomination in 1998 removed three zeros from banknotes, but that was a separate monetary reform.