Which 1998 crisis caused Russia to default on domestic debt and helped bring down Long-Term Capital Management?

The 1998 Russian financial crisis caused Russia to default on domestic debt and helped bring down Long-Term Capital Management.

Russia devalued the ruble and declared a moratorium on some foreign debt payments on August 17, 1998. The government was under pressure from falling oil prices, weak tax collection, large budget deficits, and political uncertainty. Investors had already become more cautious after the Asian financial crisis.

The turmoil spread through international markets because financial institutions held Russian debt and used highly leveraged trading strategies. Long-Term Capital Management, a prominent U.S. hedge fund, suffered severe losses on positions that were expected to behave more predictably. The Federal Reserve Bank of New York helped coordinate a private-sector rescue rather than providing a direct government bailout.

The crisis is distinct from Russia's 1998 stock-market decline, but the debt default, currency collapse, and equity sell-off were closely connected parts of the same financial emergency.