Statements consisting only of original research should be removed. The crisis had severe impacts on the economies russian financial crisis 1998 pdf many neighboring countries.
In the first half of 1997, the Russian economy showed some signs of improvement. However, soon after this, the problems began to gradually intensify. 35 years old, as acting prime minister. Head of the State Tax Service. 5 billion in debt owed to Russian workers. On 14 August 1998 the exchange rate of the Russian ruble to the US dollar was still 6. Despite the bailout, July 1998 monthly interest payments on Russia’s debt rose to a figure 40 percent higher than its monthly tax collections.
Central Bank would intervene by spending foreign reserves to buy rubles. For instance, during the year prior before the crisis, the Central Bank aimed to maintain a band of 5. USD, meaning that it would buy rubles if the market exchange rate threatened to exceed 7. Similarly, it would sell rubles if the market exchange rate threatened to drop below 5. The inability of the Russian government to implement a coherent set of economic reforms led to a severe erosion in investor confidence and a chain reaction that can be likened to a run on the Central Bank. This forced the Central Bank to spend its foreign reserves to defend Russia’s currency, which in turn further eroded investor confidence and undermined the ruble. Russia on the eve of the meltdown.