Russia defaulted on its domestic debt and devalued the ruble in 1998, helping trigger a global market shock.
On August 17, 1998, the Russian government widened the ruble's trading band, suspended payments on some domestic debt, and announced a 90-day moratorium on certain foreign debt payments. The measures followed falling oil prices, weak tax collection, political uncertainty, and pressure on Russia's finances.
The crisis damaged Russian banks and investors worldwide. It also contributed to the collapse of Long-Term Capital Management, a highly leveraged U.S. hedge fund whose rescue in September 1998 required coordination by the Federal Reserve Bank of New York.
Russia's episode is distinct from the 1997 Asian financial crisis, although the two were linked through investor risk aversion and capital flows. The ruble was redenominated in 1998, with 1,000 old rubles becoming one new ruble in 1998–1999.