Russia’s government default helped trigger the 1998 Russian financial crisis and market crash.
On August 17, 1998, the Russian government devalued the ruble, declared a moratorium on some foreign debt payments, and effectively defaulted on domestic ruble debt. The announcement followed years of fiscal pressure, weak tax collection, falling commodity prices, and the aftereffects of the Asian financial crisis.
The crisis caused the ruble to collapse, banks to fail, and investors to flee Russian assets. It also contributed to the failure of Long-Term Capital Management, a highly leveraged U.S. hedge fund whose positions were affected by extreme market movements. The Federal Reserve helped organize a private-sector rescue to limit wider systemic risk.
The Russian default was not the same event as the 1998 Asian crisis, although the two were connected through global capital flows and investor risk perceptions. Russia later benefited from higher oil prices and stronger public finances, but the 1998 episode remains a defining post-Soviet financial shock.