Russian Financial Crisis (1998)

The 1998 Russian financial crisis, also called the ruble crisis or the Russian flu, began on 17 August 1998 when Russia's government devalued the ruble, defaulted on domestic debt, and declared a moratorium on foreign debt payments. The crisis followed years of chronic fiscal deficits, the fiscal strain of the First Chechen War, contagion from the 1997 Asian financial crisis, and a sharp drop in oil prices that undercut a major source of the government's revenue. The ruble collapsed from roughly 6.4 to more than 21 per US dollar within weeks, inflation for the year reached 84 percent, and major banks including Inkombank, Oneximbank and Tokobank collapsed. The crisis briefly destabilized emerging markets worldwide and contributed to Long-Term Capital Management's collapse the following month, illustrating how quickly a regional sovereign default could propagate through the global financial system.