Russia experienced the 1998 stock-market crash after its government defaulted on domestic debt.
In August 1998, Russia devalued the ruble, declared a moratorium on some foreign debt payments, and restructured domestic government debt. The announcement triggered a severe financial crisis. Russian shares plunged, the ruble lost much of its value, and banks faced widespread insolvency.
Russia’s economy was already weakened by low oil prices, falling tax revenues, large fiscal deficits, and heavy reliance on short-term government securities. The Asian financial crisis had also reduced investor appetite for emerging markets. Efforts to defend the ruble through high interest rates and foreign borrowing ultimately failed.
The crisis is sometimes described simply as a currency crisis, but it combined sovereign default, banking distress, and market collapse. The International Monetary Fund and other lenders had provided support before the default, yet the assistance did not prevent the August breakdown.