The Russian ruble was devalued during the 1998 financial crisis, causing a major market crash.
On August 17, 1998, Russia devalued the ruble, defaulted on domestic government debt, and declared a temporary moratorium on payments by commercial banks to foreign creditors. The measures followed years of fiscal pressure, weak tax collection, falling commodity prices, and the financial strain that spread through emerging markets after the Asian crisis.
The ruble’s exchange-rate band was widened before the currency was allowed to float and then depreciate sharply. Russia’s domestic financial system suffered severe disruption, while investors around the world reassessed the risks of emerging-market debt. The crisis also contributed to the failure of Long-Term Capital Management, a major U.S. hedge fund, after its highly leveraged positions lost value. The ruble is Russia’s currency; it should not be confused with neighboring countries’ currencies such as Ukraine’s hryvnia or Kazakhstan’s tenge.