What event on August 17, 1998, marked the beginning of Russia’s financial crisis?

The Russian government default on August 17, 1998, marked the beginning of Russia’s 1998 financial crisis.

Russia announced a restructuring of domestic ruble-denominated debt, a temporary moratorium on some foreign debt payments, and a widening of the ruble’s trading band. The measures amounted to a sovereign default and were accompanied by a sharp currency devaluation.

The crisis followed years of weak tax collection, low commodity prices, political instability, and heavy reliance on short-term government borrowing. Falling oil prices reduced export income, while investors became increasingly unwilling to finance Russian debt.

The turmoil hit Russian banks and stock prices and also contributed to the collapse of the American hedge fund Long-Term Capital Management. Central banks and private institutions arranged a rescue because officials feared that its failure could spread stress through global financial markets.