Russia’s ruble and government-bond crisis caused the 1998 Russian stock-market crash.
Russia faced falling commodity revenues, weak tax collection, political uncertainty, and heavy short-term borrowing. On August 17, 1998, the government devalued the ruble, declared a temporary moratorium on some foreign debt payments, and restructured domestic ruble debt. The ruble then lost much of its value.
Russian share prices plunged, banks failed, and confidence in emerging markets deteriorated. The crisis also affected international investors and contributed to the collapse of Long-Term Capital Management, a highly leveraged U.S. hedge fund, although that fund’s problems had several causes.
The crisis is sometimes described simply as a currency crisis, but it combined sovereign-debt default, devaluation, banking stress, and a stock-market collapse. Russia later recovered partly as oil prices rose and macroeconomic conditions improved.