Russia decided to devalue the ruble on August 17, 1998, during the 1998 Russian financial crisis.
The Russian government and central bank widened the ruble’s trading band, announced a temporary debt moratorium, and effectively devalued the currency. The announcement followed falling oil prices, weak tax collection, large government borrowing, and pressure on Russia’s exchange-rate regime.
The crisis damaged Russian banks, government bonds, and equity markets. Many banks became insolvent, inflation accelerated, and confidence in the financial system deteriorated. International investors also faced losses as Russian debt was restructured or defaulted on under the emergency measures.
The ruble’s crisis was connected to the wider aftermath of the 1997 Asian financial crisis, but it had important domestic causes. Russia had adopted market reforms after the Soviet Union’s collapse, yet its fiscal institutions remained weak. The crisis also contributed to the failure of the U.S. hedge fund Long-Term Capital Management, which required a private-sector rescue coordinated by the Federal Reserve Bank of New York.