Which 1998 crisis caused Russia’s RTS Index to collapse after the country defaulted on domestic debt?

The Russian financial crisis caused the RTS Index to collapse after Russia defaulted on domestic debt in 1998.

Russia announced a devaluation of the ruble and a restructuring, effectively defaulting on some ruble-denominated government debt, on August 17, 1998. The announcement followed falling commodity prices, weak public finances, political instability, and pressure from the wider emerging-market turmoil.

The RTS Index, established in 1995, was a key benchmark for Russian shares. Its collapse reflected the sudden loss of investor confidence and the difficulty of valuing companies during currency and debt turmoil. The ruble’s subsequent depreciation also made foreign-currency liabilities more difficult to service.

The Russian crisis had international consequences. The failure of the hedge fund Long-Term Capital Management soon afterward raised fears about interconnected financial markets and prompted a major private-sector rescue arranged with Federal Reserve involvement.