The Russian financial crisis of 1998 caused Russia's currency to be dramatically devalued. What is the percentage change in value of a $100 million investment in Russia when the exchange rate changes from $1 = 6 rubles to $1 = 25 rubles?

Question

Quizplus · Accepted Answer

Initially, the $100 million investment in Russia would be worth 600 million rubles. However, after the devaluation, $1 only equates to 25 rubles, meaning the investment is now worth only 2.5 billion rubles ($100 million divided by 25). This represents a percentage change in value of (2.5 billion - 600 million) / 2.5 billion = -76%.

The Russian Financial Crisis of 1998 Caused Russia's Currency to Be