The 1998 Russian financial crisis followed Russia’s ruble devaluation and government debt default, causing a sharp stock-market collapse.
Russia faced falling oil and commodity prices, weak tax collection, and the financial aftershocks of the 1997 Asian financial crisis. On 17 August 1998, the government devalued the ruble, defaulted on domestic ruble-denominated debt, and declared a moratorium on some foreign debt payments.
The crisis severely damaged Russian banks and businesses. The ruble lost much of its value, while the Russian Trading System index fell dramatically. The turmoil also contributed to the collapse of Long-Term Capital Management, a major U.S. hedge fund, after its highly leveraged positions became difficult to unwind.
This event is sometimes confused with the Asian financial crisis, which began in Thailand in 1997. The Russian crisis came later and had its own immediate causes, although the two episodes were connected through international investor fear and capital flight.