Which Russian default and ruble crisis shook markets in August 1998?

The Russian default and ruble crisis that shook markets in August 1998 was the Russian financial crisis.

Russia faced falling tax revenues, weak public finances, political instability, and heavy reliance on short-term government debt known as GKO bills. The Asian financial crisis had already reduced investor appetite for emerging markets. On August 17, 1998, Russia devalued the ruble, declared a moratorium on some foreign debt payments, and effectively defaulted on domestic ruble debt.

The shock spread through banks and global markets. The collapse of the hedge fund Long-Term Capital Management soon afterward demonstrated how international financial links could transmit losses, although the fund’s failure had multiple causes. The Russian crisis is often confused with the 1997 Asian crisis because they occurred close together and were connected through investor sentiment. Russia’s episode centered on sovereign debt, currency devaluation, and banking stress.