Which 1998 crash forced Russia to devalue the ruble and default on domestic debt?

The 1998 crash that forced Russia to devalue the ruble and default on domestic debt was the Russian financial crisis.

Russia had entered the late 1990s with weak public finances, low tax collection and heavy reliance on short-term government securities known as GKOs. Falling commodity prices reduced export revenue, while the Asian financial crisis damaged investor confidence in emerging markets. Maintaining the ruble’s exchange-rate band became increasingly difficult.

On August 17, 1998, the Russian government and central bank announced a devaluation of the ruble, a restructuring of domestic debt and a temporary moratorium on some private foreign debt payments. The ruble then lost much of its value, and Russian banks faced severe stress.

The crisis affected global markets and contributed to the collapse of Long-Term Capital Management, a large U.S. hedge fund whose positions became dangerous amid extreme volatility. Russia later recovered as the ruble’s depreciation improved competitiveness and rising oil prices supported revenues. The episode was not simply a stock-market crash; it combined currency, sovereign-debt and banking crises.