KSRussian Financial Crisis

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The Russian financial crisis also called "Ruble crisis" or the "Russian Flu" hit Russia in the year 1998. It resulted in the Russian government and the Russian Central Bank devaluing the ruble and defaulting on its debt.KSIntroduction

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The Russian Crisis of 1998 was triggered by fixed peg of Russian ruble, the external economic shocks of due to the Asian financial crisis of 1997/98 and the unsustainable growth of government debt. KSHistorical Background

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Since May 1998 Russia has experienced

Declining gross domestic product (GDP)Increasing inflationIncreasing unemploymentHigh interest ratesKSEconomic Indicators

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KSFalling GDP

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KSThe graph shows that inflation had fallen from 131% in 1995 to 22% in 1996 to 11% in 1997 and looked very promising for the next year.

High Inflation

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KSThe Russian Central Bankss refinancing rate spiked at 150% during the week of May 27 to June 4, 1998. High Interest Rates Rising UnemploymentBy the end of 1998, the Russian unemployment rate had reached close to 12% having increased from 7.0% in 1994.5.

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KSAt the end of July 1998, the exchange rate was $1=R6.235.By the end of August 1998 it had declined to $1=R7.905, a 21% depreciation.But by the end of September the ruble had declined to $1= R16.064, a 61% depreciation in a two month period.By early February 1999, the ruble stood at around $1=23R.Fall in Value of the Ruble

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KSThe Russian Crisis of 1998 was mainly triggered due to Russias economic structure, internal environment and its political processesConclusion

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