Russia defaulted on its domestic debt during the 1998 crisis that caused a major global market shock. On August 17, 1998, the Russian government devalued the ruble, restructured ruble-denominated debt, and declared a temporary moratorium on some private foreign debt payments.
The crisis followed years of fiscal pressure, weak tax collection, low commodity prices, and the financial aftershocks of the 1997 Asian crisis. Russia had struggled to defend its currency while maintaining large government obligations and a fragile banking system.
The default damaged international confidence and contributed to the collapse of Long-Term Capital Management, a highly leveraged U.S. hedge fund. The Federal Reserve helped coordinate a private-sector rescue, but the Russian default itself was a sovereign-debt event rather than a stock-exchange closure.