August 17, 1998, is associated with Russia’s financial crisis, when the government defaulted on domestic debt and devalued the ruble.
Russia announced a restructuring of ruble-denominated government debt, a temporary moratorium on some private foreign debt payments, and a widening of the ruble’s trading band. The announcement followed years of fiscal weakness, low tax collection, dependence on short-term borrowing, and falling commodity prices.
The crisis damaged Russian banks and caused the ruble to lose much of its value. It also affected international investors and contributed to the near-collapse of Long-Term Capital Management, a highly leveraged US investment fund. The Federal Reserve helped coordinate a private-sector response to that separate but connected market emergency.
Russia’s crisis is sometimes confused with the 1997 Asian financial crisis because both involved capital flight and currency pressure. They were distinct episodes, although the earlier Asian turmoil weakened investor confidence in emerging markets and helped create a more fragile international financial environment.