Declining productivity, a high fixed exchange rate between the ruble and foreign currencies to avoid public turmoil, fatal financial imprudence and a chronic fiscal deficit were the reasons that led to the crisis. The economic cost of the first war in Chechnya took a significant toll on the Russian economy. In early 1995, it was estimated that the war was costing Russia close to $30 million per day. Following the cessation of hostilities in 1996, it was estimated that the war in Chechnya cost Russia $5.5 billion, close to 10% of their GDP. In the first half of 1997, the Russian economy showed some signs of improvement. However, soon after this, the problems began to gradually intensify.Two external shocks, the Asian financial crisis that had begun in 1997 and the following declines in demand for (and thus price of) crude oil and nonferrous metals, severely impacted Russian foreign exchange reserves.