Russia’s 1998 financial crisis included the default on domestic debt known as the Russian default.
On August 17, 1998, the Russian government and central bank announced a devaluation of the ruble, a restructuring of domestic government debt, and a temporary moratorium on some private foreign debt payments. The announcement followed falling oil prices, weak tax collection, political instability, and pressure on the country’s exchange-rate regime.
The crisis caused the ruble to lose much of its value and disrupted banks and businesses. Russian financial stress also contributed to the failure of Long-Term Capital Management, a major U.S. hedge fund, after losses and market turmoil made its highly leveraged positions dangerous to the wider financial system.
The Russian default should not be confused with the later Argentine default of 2001. Both involved sovereign debt crises, but they occurred in different countries and years. Russia’s economy eventually recovered as oil prices improved and the currency adjustment supported domestic production.