The sharp fall comes after a surge in inflation that, if left untamed, threatens to destroy Russia's entire monetary system and abort free-market reform. The monthly inflation rate in January, officials predict, will be about double the December level of 25 per cent.
The rouble - once pegged at two US dollars - has slid steadily on Moscow's currency exchange since the introduction of price reforms a year ago. Over the past month it has gone into free-fall, losing nearly 40 per cent in value.
'It is frightening,' said one Western economist who advises the Russian government. 'Things can go crazy when inflation spins out of control. We are not just crying wolf.'
A senior Central Bank official said yesterday that the bank was preparing designs for 50,000 and 100,000 rouble banknotes 'just in case'. The highest denomination in circulation is 5,000 roubles.
The currency crisis puts new pressure on a fragile government already divided between reformist ministers recruited by Yegor Gaidar, the ousted architect of Russia's 'shock therapy', and his replacement as Prime Minister, Viktor Chernomyrdin, a more cautious apparatchik.
Despite the currency crisis, the government yesterday promised to press on with an ambitious programme to sell off state assets, promising that shops and other small-scale enterprises would all be in private hands by the end of the year.