Russia’s 1998 default and ruble devaluation caused a major international stock-market shock.
On 17 August 1998, Russia devalued the ruble, defaulted on domestic ruble-denominated debt, and declared a moratorium on some foreign debt payments. The crisis followed years of fiscal strain, weak tax collection, falling commodity prices, and pressure from the wider Asian financial crisis.
Russian banks and businesses suffered severe losses, while investors worldwide became more concerned about emerging-market debt and leveraged positions. The failure of the U.S. hedge fund Long-Term Capital Management soon afterward showed how Russian-related losses could interact with complex financial contracts and forced a private-sector rescue organized by the Federal Reserve Bank of New York. Russia’s economy eventually benefited from higher oil prices and a weaker ruble, but the immediate crisis was deeply disruptive. The episode is distinct from Russia’s 1991 transition crisis and the 2014 ruble collapse.