Russia’s stock market suffered the largest one-day percentage fall during the 1998 Russian financial crisis. On October 27, 1997, the Russian Trading System index fell 7.4 percent, part of a severe sell-off that intensified during the following year.
The crisis involved falling commodity prices, weak government finances, political uncertainty, and heavy reliance on short-term debt. Russia had difficulty maintaining its exchange-rate band and servicing domestic debt. In August 1998, the government devalued the ruble, declared a moratorium on some private external debt payments, and restructured ruble debt.
The turmoil spread through emerging markets and contributed to intense international concern. The collapse of Long-Term Capital Management later that year showed how financial stress could transmit through highly leveraged global institutions, although the fund’s rescue is a separate event.
The answer is Russia, not Brazil or another emerging market affected by contagion. Those countries experienced substantial market pressure, but the crisis itself centered on Russia’s debt, currency, and banking problems.