Russia announced its default and ruble devaluation on August 17, 1998, intensifying the 1998 financial crisis.
The Russian government declared a 90-day moratorium on some foreign debt payments, widened the ruble’s trading band, and announced that it would restructure domestic ruble-denominated debt. The measures followed falling oil prices, weak tax collection, political uncertainty, and pressure on Russia’s currency reserves.
The ruble subsequently lost much of its value, while Russian banks and investors suffered heavy losses. International markets were already unsettled by the Asian financial crisis, and Russia’s turmoil helped expose the vulnerability of highly leveraged investors.
The event also contributed to the collapse of Long-Term Capital Management, a large U.S. hedge fund. The Federal Reserve helped coordinate a private-sector rescue, but the Russian government did not receive a conventional bailout covering the defaulted domestic debt.