Which Russian financial event in 1998 intensified a worldwide market sell-off after the country defaulted on domestic debt?

The Russian financial event in 1998 that intensified a worldwide market sell-off after the country defaulted on domestic debt was the Russian financial crisis.

On 17 August 1998, Russia devalued the ruble, defaulted on some domestic debt, and declared a 90-day moratorium on certain foreign debt payments. The announcement followed falling oil prices, weak tax collection, political instability, and pressure on Russia’s currency and government finances.

The crisis damaged Russian banks and businesses and caused the ruble to lose much of its value. International investors became more cautious about emerging markets, while highly leveraged institutions faced losses. The shock also contributed to the collapse of Long-Term Capital Management, a major U.S. hedge fund, although its problems had several causes.

The Russian crisis is sometimes reduced to a simple currency devaluation. In fact, it combined sovereign default, banking stress, exchange-rate collapse, and a broader loss of confidence in Russia’s financial system.