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

The value of the investment in rubles before the devaluation is $100 million * 6 = 600 million rubles. After the devaluation, the value of 600 million rubles at the new exchange rate of $1 = 25 rubles is 600 million / 25 = $24 million. The percentage change in value is then (($24 million - $100 million) / $100 million) * 100% = (−$76 million / $100 million) * 100% = −76%.

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