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Russian banks have warned against hysterically jumping to the conclusion that the current ruble crisis will follow the trajectory of 1998, when the country was forced to default.
The ruble’s spectacular 22 percent plunge on Monday and Tuesday has prompted investors to liken the crisis to 1998, when the ruble lost 27 percent on August 17, 1998. However, these days, Russia’s balance sheet is strong enough to weather the ruble sell-off.
On Tuesday, the ruble grazed the 80 ruble to the US dollar benchmark. Compared to its price of 32.9 to the dollar on January 1, 2014, it signaled a 58 percent loss in value.
In 1998, over a six month period, the currency lost more than 70 percent of its value. Inflation skyrocketed, banks and enterprises across the country collapsed, and Russians were left jobless.