Which 1998 crisis caused Russia to default on domestic debt and devalue the ruble before global markets fell?

The 1998 crisis that brought a Russian domestic-debt default and ruble devaluation was the Russian financial crisis.

Russia had financed large budget deficits with short-term government securities while maintaining a ruble exchange-rate band. Falling commodity prices, weak tax collection, and the spillover from the 1997 Asian financial crisis made that arrangement increasingly difficult to sustain.

On August 17, 1998, Russia devalued the ruble, declared a moratorium on some foreign debt payments, and restructured domestic government debt. The announcement shocked investors and contributed to severe losses in emerging-market assets.

The crisis also threatened the highly leveraged U.S. hedge fund Long-Term Capital Management. The Federal Reserve Bank of New York helped coordinate a private-sector rescue in September 1998. Russia later benefited from higher oil prices and improved fiscal conditions in the following decade.