Russia's 1998 financial crisis caused its stock market to collapse and the ruble to be devalued.
The crisis developed after years of weak tax collection, heavy government borrowing, falling commodity prices, and the financial strain that followed the 1997 Asian financial crisis. Russia relied heavily on short-term domestic debt, much of it carrying high interest rates, to finance the state budget.
On August 17, 1998, the government devalued the ruble, declared a moratorium on some foreign debt payments, and effectively defaulted on domestic government debt. Russian financial markets plunged, banks faced severe stress, and the shock spread through international investors and hedge funds.
This crisis is sometimes confused with the Asian crisis itself. The two were connected through global capital flows, but Russia's default and ruble devaluation were distinct events. The ruble later stabilized after a sharp depreciation, while oil prices eventually improved Russia's fiscal position.