Russia’s 1998 financial crisis caused its stock market to collapse after a ruble devaluation and debt default.
In August 1998, Russia devalued the ruble, defaulted on domestic debt, and imposed a temporary moratorium on some foreign debt payments. The crisis followed years of weak tax collection, dependence on commodity revenues, political instability, and pressure from falling oil prices. Russian banks and companies were severely affected.
The collapse also spread internationally. Investors became more cautious about emerging markets, and the shock contributed to the near-failure of Long-Term Capital Management in the United States. That hedge fund’s problems led to a private-sector rescue coordinated by the Federal Reserve, a separate event from the Russian default itself.
The ruble eventually stabilized after a steep fall. Russia’s economy later benefited from higher commodity prices, but the 1998 episode remained a major example of how sovereign debt and currency crises can damage equity markets.