Which currency crisis contributed to the 1998 collapse of Russia’s stock market?

The Russian ruble crisis contributed to the 1998 collapse of Russia’s stock market.

Russia’s 1998 financial crisis involved a devaluation of the ruble, a domestic debt default, and a banking crisis. On August 17, 1998, the Russian government and central bank announced a widening of the ruble’s trading band, a temporary moratorium on some foreign debt payments, and restructuring of ruble-denominated government debt.

The stock market had already been weakened by falling oil prices, political uncertainty, weak tax collection, and heavy reliance on short-term government securities. When investors lost confidence, Russian shares plunged and capital flowed out. The crisis also produced international repercussions, including severe losses at the U.S. hedge fund Long-Term Capital Management.

The term “Asian financial crisis” is sometimes incorrectly used for the Russian episode because the events were connected through global investor sentiment. Russia was affected by that wider environment, but the specific currency shock was the ruble crisis, centered on Russia’s own exchange-rate and debt problems.