Which Russian financial crisis included the government’s August 17, 1998 devaluation of the ruble?

The Russian financial crisis included the government’s August 17, 1998 devaluation of the ruble.

Russia entered the crisis with weak tax collection, large government deficits, heavy short-term borrowing, and pressure from low commodity prices. The government relied heavily on short-term treasury bills, known as GKOs, to finance its obligations.

On August 17, 1998, Russia devalued the ruble, widened its exchange-rate band, and announced a restructuring or moratorium affecting domestic debt. The measures produced severe losses for investors and contributed to banking failures and a sharp economic contraction.

The crisis also affected global markets. Investors became more cautious about emerging-market debt, and the difficulties contributed to the near-collapse of Long-Term Capital Management in the United States. The crisis is sometimes reduced to a currency crash, but sovereign debt and banking weakness were equally important.