The Russian ruble set a new all-time record low on Tuesday after bouncing back briefly despite an emergency move by Russia's central bank to raise interest rates to 17 percent.
The currency weakened to nearly 67 rubles against the dollar after bouncing briefly to 61 rubles earlier Tuesday following the central bank's midnight move to hike interest rates to 17 percent from 10.5 percent to halt the collapse of the ruble.
The Russian currency hit a low of 64.4 rubles on Monday night, sliding 9.5 percent in a single day, its largest one-day fall since the 1998 crisis.
The slide came as the bank warned that low oil prices could trigger a contraction of nearly five percent next year.
The worsening economic outlook presents a serious challenge for President Vladimir Putin, whose social compact with Russians has been based on years of economic stability and relative prosperity.
The decision by the central bank to hike the interest rate sharply divided observers.
Respected former finance minister Alexei Kudrin approved the move, saying on Twitter that "in current conditions (it was) compulsory but correct."
But he said the Russian government should now adopt measures to help win back the trust of investors.
Alfa Bank struck a similar note.
"While the Russian central bank may have addressed capital control fears with such an aggressive move, the main issue here would be winning back the population’s confidence, as it has been converting savings into dollars at a faster pace," said the bank.
Meanwhile Russia's ombudsman for the rights of entrepreneurs, former finance minister Alexei Kudrin, disparaged the move, saying it did not make sense to save the ruble at the expense of the entire economy.
"During (Putin's) address to the nation we heard about the need to develop business, new technologies, investment and import substitution, but the central bank's decision is categorically against all of these," he said on Russian radio.
Analysts are increasingly concerned over Russia's economic outlook and the authorities' apparent reluctance to change tack over the Ukraine crisis as the economy heads into recession.