The Russian Ruble Crisis of 1998

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Submitted By Hsoa
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The Russian Ruble Crisis of 1998 is termed as among the worst financial crisis to hit the Russian economy. The Crisis is believed to have been triggered by a number of factors. The Asian financial crisis of 1997 is a major cause of the crisis as it led to declines in the world commodity prices (Owyang, & Chiodo 2002, p. 7). Just to be appreciated is the fact that Russian economy was heavily dependent on oil. There are other reasons such as the downfall of the Soviet Union in 1991 and the economic difficulties it brought to the Russian nation. Another common cited reason is poor financial policy practices by the Russian government as well as political crisis that were witnessed in the nation earlier that year (Owyang, & Chiodo 2002, p. 7). The Russian financial crisis had various political and economic consequences.
First, the crisis compromised the confidence of the citizens of Russian to the government of president Yeltsin. Indeed, facing much opposition in the parliament, Yeltsin was forced to fire Kiriyenko as the prime minister and nominated Foreign Minister Yevgeny Primakov to the position (Tarassova, Kraakman, & Black 2000, p. 12). On the economic front, the Russian crisis led to the collapsing of the Russian stock, bond, and currency market on august 13, 1998. This was a direct result of investors fear that the government could devalue the ruble as well as claims of failure by the government to repay its domestic debts. This paper gives a critical analysis on the causes and consequences of the Russian Crisis 1998.
Causes of the Russian Crisis 1998
The Russian Crisis 1998 was triggered by a combination of various independent factors. First, the Russian nation experienced a decline in its productivity (Colorado School of Business 2009). According to available statistics, the Russian economic was highly dependent on petroleum, natural gas, metal,…...

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