What 1998 crisis followed Russia’s ruble devaluation and sovereign debt default?

The 1998 crisis that followed Russia’s ruble devaluation and sovereign debt default was the Russian financial crisis.

On August 17, 1998, Russia devalued the ruble, defaulted on some domestic debt, and declared a moratorium on certain foreign debt payments. The announcement followed falling oil prices, political uncertainty, weak tax collection, and heavy reliance on short-term government securities.

The crisis damaged Russian banks and businesses and caused severe market disruption. It also contributed to the failure of Long-Term Capital Management, a large U.S. hedge fund, after losses spread through highly leveraged financial positions. The Federal Reserve helped coordinate a private-sector rescue, although it did not directly bail out the fund.

Russia’s 1998 crisis is often mixed up with the Asian financial crisis of 1997. The two were connected through international investor sentiment, but they involved different immediate triggers and national financial systems.