Fistful of roubles for a few dollars more: Russia's currency is crashing on Moscow's twice-weekly foreign exchange. Andrew Higgins reports

IT IS all over in just 18 minutes. The man on the podium, Alexei Mamontov, waves his hands; the number 248 is flashed on to a television set next to a grand piano; a blonde woman in a shimmering gold blouse beams at the audience.

It is reminiscent of an old American game show, earnest and wholesome but mildly spiced by the promise of a grand prize and the presence of a decorative hostess.

The scene is the Moscow Interbank Currency Exchange: the rouble has just plunged to yet another record low against the dollar, thanks to one of Russia's boldest and most treacherous experiments in free market economics.

The rouble, like much else in Russia, has collapsed. It used to be worth - or rather pretend to be worth - two dollars. But, with the crutch of state control kicked away, it now fetches less than half a cent. As of Thursday, when Mr Mamontov's television screen began flashing, a single dollar can buy 248 roubles.

Until two years ago, all forms of currency trading were illegal, a restriction that turned dingy hotel lobbies across Moscow into black market bazaars. The furtiveness has vanished. Money changers still do business on the street, but even they follow the price fixed by men in suits at the twice-weekly sessions of the Moscow Interbank currency auction.

The result is an economy as surreal in some ways as the old one created by Communist Party edict. Even with inflation, prices are ludicrously low when converted into hard currency: pounds 5 air fares to Central Asia, loaves of bread for under 2p, Metro tickets for a third of a pence.

The venue for the currency auction is as grand as the old black market haunts were grimy: a panelled hall on the second floor of Russia's central bank - a fine, colonnaded building on Neglinnaya Street in the centre of what is rapidly becoming Moscow's new financial district. The building was erected in 1895 to house the imperial bank of the last Tsar, Nicholas II.

A few relics of the bank's recent past linger. A bust of Lenin has been removed from the polished marble lobby, but there is still a red star sprouting mock flames in red and orange plastic. A plaque engraved with the hammer and sickle pays tribute to victims of the Great Patriotic War.

Upstairs in the auction room, such memories might as well belong to another planet. The Interbank Currency Exchange is capitalism in a particularly romantic form, a throw-back to the early days of dealing in the coffee houses of the City. A handful of traders carry portable telephones and exchange staff tap figures into a pair of primitive computers at the front of the room. Otherwise, the 20th century barely intervenes.

Whether the rouble ever trades freely with other world currencies will depend largely on what happens to the Interbank Exchange. Independent from the central bank since January, it is a joint-stock company owned by 67 Russian commercial banks and runs auctions every Tuesday and Thursday morning for dealers in these banks.

In contrast to Western currency markets, where satellites and computers unite financial capitals in a faceless fracas of perpetual motion, currency trading in Moscow proceeds at a stately pace. The tools of the trade are paper and pens.

If the practices are quaint, the consequences are more brutal. Responsible for overseeing the painful shift from a fixed rate to a currency in free-fall is Alexander Zakharov, the 37-year-old exchange director. He is not optimistic about the rouble's future: 'Until we control financial policy, our currency can only go down.'

He also admits that the rouble rate against the dollar has little to do with currency trading elsewhere in the world. Even when the dollar goes down outside Russia, it marches irresistibly upwards in Moscow.

Pasted on to Mr Zakharov's telephone is a sticker showing the cartoon character Snoopy and the legend 'Don't Panic'. It makes a fitting motto for Mr Zakharov and the other 30-something economists now trying to salvage Russia's crumbling economy.

Chief among these is Yegor Gaidar, acting prime minister and architect of Boris Yeltsin's economic policy. So far, the most notable consequence of this policy is runaway inflation, expected to be 2,200 per cent this year. On Tuesday, as Mr Gaidar prepared to speak at the opening of Russia's parliament, currency dealers gave their verdict on his programme: the rouble slumped from 205.5 to 241 against the dollar.

Ironically, such market sensitivity is just what Mr Gaidar wants. He may disagree with traders' pessimism, but he is a fierce defender of their right to make decisions instead of the state.

Compared with international currency markets, where up to a thousand billion dollars can change hands in a single day, the Moscow market is miniscule. But it is growing. Last week's turnover totalled dollars 129.9m, nearly half the amount traded last month and seven times the turnover in January.

The growth in volume and the rouble's precipitous fall have led to calls from conservatives, particularly within the central bank, for a return to fixed rates. The central bank chairman, Viktor Gerashchenko, a leading figure in a powerful lobby group of former apparatchiks and taipans of state industry, believes the rouble should trade at around 15 to the dollar instead of 248. And in the first eight months of the year, he spent dollars 650m trying in vain to prop it up. But he warned three weeks ago that money to intervene was running out.

The influence of the Interbank exchange auctions is immense. Although many state firms importing essential goods still get a subsidised exchange rate, the rate fixed by dealers is the one that matters.

Before each session, dealers fill in forms saying how many dollars they want to buy or sell. Exchange officials then tot up the total and announce the gap that has to be closed between those buying and selling dollars. It is then the turn of Mr Mamontov, chief auctioner, to take the stage.

The sessions can last from five minutes to two hours. The last auction on Thursday followed the familiar pattern. The starting price is 241 and, as usual, more dealers want to buy dollars than sell.

Mr Mamontov's job is to correct the balance. First he raises the price to 242 and manages to winkle out a few more rouble buyers. They scribble down their bids and hand them to the woman in gold. The pace quickens.

The representative from Russia's central bank, a plump man sitting near the back, flashes a sign with his hand. It is a signal Mr Mamontov understands: the bank wants to sell off dollars and put a brake on the rouble's slide.

The offer price for dollars rises to 247 and then 248. Finally, it stops. Dealers rush to cash in. Bits of paper with scribbled purchase bids flutter to the front of the room. Mr Mamontov announces the gap closed. Buyers and sellers are balanced. The day's trading is over.

(Photograph omitted)