Russia devalued the Russian ruble during the 1998 financial crisis, contributing to a major market crash.
On August 17, 1998, the Russian government and central bank widened the ruble’s trading band, effectively devalued the currency, and announced a partial default on domestic debt. The measures followed years of fiscal strain, weak tax collection, falling commodity prices, and pressure on Russia’s reserves.
The crisis damaged Russian banks and businesses and caused the ruble to lose much of its value. It also spread through international financial markets, where investors became more cautious about emerging-market debt and leveraged positions. Long-Term Capital Management later suffered severe losses partly because of the Russian shock.
The ruble’s devaluation is sometimes described simply as a stock-market crash, but it was a broader sovereign-debt, currency, and banking crisis. Russian shares fell dramatically, while the currency and government bond markets were also central to the episode.