Russia scrambled Wednesday to halt a run on the ruble, selling billions of reserves to prop up the currency in the worst economic crisis of President Vladimir Putin's 15 years in power.
At the same time, the United States prepared to pile further sanctions on Russia over its actions in Ukraine, which have combined with falling oil prices to produce the perfect storm causing the currency to go into freefall.
The ruble, which lost a fifth of its value in a single day on Tuesday, has lost 60 percent of its value since the beginning of the year.
After opening down around 3.0 percent at around 1000 GMT on Wednesday, it rallied slightly, trading at 66.05 to the dollar, from 67.88 on Tuesday evening, and at 82.20 to the euro from 85.15.
"This is a very dangerous situation. It could be just days before a full-on run on the banks by account holders," wrote Vedomosti business daily in an editorial on Wednesday, warning of a "panic" mood.
"Calming the population and preemptively addressing any banking sector issues is of the utmost importance, especially ahead of the weekend," said Alfa Bank analysts.
Making matters worse, late Tuesday the White House confirmed that President Barack Obama will sign into law a bill to tighten sanctions against Russia over its role in Ukraine.
Prime Minister Dmitry Medvedev voiced confidence that Moscow can contain the crisis. "The country has the currency resources to achieve... all the economic and production goals that you have set," he told a televised emergency meeting of ministers and industry leaders.
The central bank said Wednesday it had spent $1.96 billion on Monday in a bid to prop up the currency. The regulator has spent more than $10 billion out of its currency reserves since the start of the month. The currency reserves were worth $415 billion on December 5.
The central bank late Monday announced a massive hike of its key interest rate to 17 percent from 10.5 percent, but the move failed to stabilize the ruble.
The currency "continues to weaken as the Bank of Russia seems set on preserving reserves, thus allowing the local currency to settle naturally into a certain range," wrote Alfa Bank analysts.
The bank's strategy faced harsh criticism in Russian media on Wednesday.
Nezavisimaya Gazeta daily headlined its front page: "The central bank has buried the ruble," while Noviye Izvestia daily wrote that it could not stop the fall.
Russia's finance ministry on Wednesday said it was also starting to sell its foreign currency to support the ruble.
"The finance ministry considers the ruble extremely undervalued and is starting to sell its leftover currency on the market," spokeswoman Svetlana Nikitina told AFP.
The finance ministry said it has around $7 billion at its disposal to prop up the ruble.
"We'll do it for as long as it is needed," deputy finance minister Alexei Moiseyev was quoted as saying by Interfax news agency.
The government is meanwhile reluctant to tap the emergency National Welfare Fund, worth around three trillion rubles.
At an emergency meeting on Tuesday the Russian government compiled a list of measures to stabilize the situation, said Economy Minister Alexei Ulyukayev.
President Vladimir Putin came into the firing line as well: "We've lost the feeling that Putin is a kind of magician who can control everything," wrote the wide-circulation daily Moskovsky Komsomolets, saying the president had heretofore been "Teflon Putin".
Putin has said nothing about the economic crisis this week, his spokesman saying only that this was a matter for the government, not the Kremlin. The president's hotly anticipated end-of-year news conference is set for Thursday.