Which 1998 crisis followed Russia’s ruble devaluation and government debt default, causing severe global market stress?

The 1998 crisis that followed Russia’s ruble devaluation and government debt default was the Russian financial crisis.

In August 1998, Russia devalued the ruble, declared a moratorium on some foreign debt payments, and restructured domestic government obligations. The announcement shocked investors because Russian banks, companies, and public finances were already under heavy strain. The ruble then lost substantial value, worsening inflation and financial instability.

The crisis also intensified international market anxiety. Losses on Russian debt contributed to the near-collapse of Long-Term Capital Management, a highly leveraged U.S. hedge fund. The Federal Reserve Bank of New York helped coordinate a private-sector restructuring, although the U.S. government did not directly bail out the fund.

The Russian episode occurred during the broader 1997–1998 emerging-markets turmoil, but it was not the same event as the Asian financial crisis, which began with Thailand’s baht devaluation in 1997.