Russia’s 1998 debt default intensified a global stock-market crisis.
On August 17, 1998, the Russian government devalued the ruble, declared a moratorium on some foreign debt payments, and restructured domestic government debt. The announcement followed falling commodity prices, fiscal weakness, and pressure on Russia’s exchange-rate system.
The default shocked international investors and contributed to a broad flight from risky assets. Emerging-market currencies, bonds, and equities suffered, while investors sought safer holdings. The turmoil also exposed the leverage of Long-Term Capital Management, a large U.S. hedge fund whose positions depended on relatively stable relationships between markets.
Russia’s crisis was part of a wider period of financial instability after the 1997 Asian crisis. The Russian government’s actions did not by themselves cause every global market decline, but they sharply increased fears that another major financial institution or country could fail.