Essay on Russian financial cris of 1998
Since May of 1998, Russia has been caught in the latest, and likely the most serious, in a series of economic crises. The crisis came to a head on August 17, 1998, when the government of then-Premier Sergei Kiriyenko abandoned its defense of a strong ruble exchange rate against the dollar, defaulted on government domestic debt forcing its restructuring, and placed a 90-day moratorium on commercial external debt payments. Those actions led to Yeltsin's dismissal of Kiriyenko on August 23, replaced, after a political standoff with the Duma, by a more leftward-leaning government led by Premier Yevgennij Primakov. The August crisis also lowered Russians' standard of living and set back …show more content…
On that day an unprecedented crush of the stock rates was recorded at Hong Kong stock exchange, the cumulative index dropped by 1600 points, or 14%. Panics embraced the market. The world's largest investors urgently began to call back their funds not only from Hong-Kong exchange, but also from all South Asian stock markets. Then everything worked according to domino scheme - crisis jumped to all major exchanges. On October 27, 1997 Dow Jones dropped by more than 550 points, which was the record fail in its whole history. It was deep night in Russia when it happened, and therefore the crisis came to them only on the following day.
In first minutes of the beginning of trades at Russian stock market brokers characterized the situation as "near to collapse". Foreign investors, who played a major role on the Russian market, were intensively selling out quickly depreciating securities. Because of the quick decreasing of the stock rates in 5 minutes from the beginning, the trades on the Moscow Foreign Currency Exchange (MFCE) were paused. At the same time the rate of the stocks of RAO "Gasprom" (leading Russian stocks) at Moscow Stock Exchange dropped by