What 1998 Russian market crisis followed the country’s default on domestic debt?

The 1998 Russian market crisis was the 1998 Russian financial crisis, which followed Russia’s default on domestic debt.

Russia faced weak tax collection, falling commodity prices, political instability, and a large burden of short-term government borrowing. The Asian financial crisis also reduced investor appetite for emerging markets and increased pressure on Russia’s finances.

On August 17, 1998, the Russian government devalued the ruble, declared a moratorium on some private foreign debt payments, and announced a restructuring of ruble-denominated domestic debt. The ruble lost much of its value, while banks and businesses suffered severe stress.

The crisis had international consequences. The failure of the highly leveraged U.S. hedge fund Long-Term Capital Management in September 1998 prompted a private-sector rescue coordinated by the Federal Reserve Bank of New York. Russia later benefited from higher oil prices and stronger fiscal conditions in the 2000s.