Russian Crisis 1998

Reconstructing Russian Rubles

The writing consists of an in depth analysis of the Russian Crisis in 1998 and provides its scholarly knowledge in the simplest form of structure making use of graphs and diagrams.
This paper discusses pre and post crisis events; it explores the key causes and consequences of the crisis and discusses federal response to the economic downturn. The introduction provides readers with a brief idea about the crisis and the latter looks into important events, facts and figures that circulated and lead to the crisis. It then provides a summary of what were the consequences, and what may have caused it. The paper concludes with critical analysis and my opinions on the whole situation.

Just when Russia’s global outlook was strengthening following the collapse of the Soviet Union in the early 1990s, the country was struck by not only one of the worst currency crisis it has seen, but also one of the most complicated one. ‘A currency crisis can be defined as a speculative attack on a country’s currency that can result in a forced devaluation and possible debt default’ (Chiodo & Owyang. 2002:7). Russia borrowed billions of U.S Dollars after the collapse of the Soviet Union, to stabilize their economy. Between 1991 and 1997, the country privatized businesses to improve conditions, started negotiations between Paris and London clubs to repay back their outstanding long term debts to restore resident and non-residents investor confidence. Oil, Timber and Gold has been Russia’s largest export, and contributed massive figures to Russian exports. Although Russia should signs of economic recovery, there were other factors that interfered in its redevelopment. Alongside in 1997, the Asian crisis triggered in Thailand, had round spread effects all over Asia. So what is it that caused the most catastrophic Ruble (the Russian currency) crisis just when it showed signs of economic prosperity? How did the government react?