Russia’s stock exchange suffered the 1998 crash after Russia defaulted on domestic debt and devalued the ruble.
The Russian financial crisis developed after years of fiscal weakness, low tax collection, political uncertainty, and dependence on commodity revenues. Falling oil and other commodity prices reduced government income, while Russia relied heavily on short-term government securities to finance its budget. Investors became increasingly unwilling to roll over that debt.
On August 17, 1998, the Russian government announced a devaluation of the ruble, a restructuring of domestic debt, and a temporary moratorium on some foreign payments. Russian shares plunged, banks failed or became insolvent, and the crisis spread through global markets. The collapse of Long-Term Capital Management in the United States soon afterward showed how international the financial connections had become.
The 1998 Russian crisis is often discussed alongside the 1997 Asian financial crisis, but Russia was the country that defaulted and devalued in this episode.