The rouble lost 21 per cent against the dollar - dropping to 3,926 - and 6,221 against sterling. Free fall on the Moscow Interbank Currency Exchange was only broken by a last-minute retreat from a policy of stoic inaction by the Central Bank. It splashed out dollars 80m ( pounds 51m) on resuscitation and rumours swept the market that it might shut down the exchange and revert to fixed rates.
Many of Moscow's exchange offices closed. Others jacked up the rate for dollars to upwards of 5,000 roubles. Best Bank on Leninsky Prospekt charted the currency's demise with pink fluorescent ink on yellow stick-on pads, its manager rejoicing in the rouble's plight: 'I love it when this happens.'
The spectacle - combined with a sharp rise in petrol prices - jolted Russia out of its Indian summer of calm, undermining confidence, upsetting budget calculations and elbowing reform plans off course. 'This is an open challenge to the authorities,' declared Alexander Livshits, chief economic adviser to President Boris Yeltsin. 'Sterling has been in such situations and there are universally accepted methods to overcome such crises.' A rise in Russia's discount rate seems likely.
Mr Livshits blamed the rouble's plight on 'egoism of exchange big-wigs, non-purpose use of budget resources and the lack of normal payment mechanisms.' Sergei Glazyev, head of parliament's economic affairs committee, called it a 'chaotic burst of speculative activity'. Russia has 2,300 commercial banks, many of which do little more than gamble on currency. A relative stabilisation earlier this year pushed many to the wall and helped bring down notorious pyramid schemes such as MMM.
Also propelling the plunge is underlying unease about the economy. Anatoly Chubais, the sole strongly reformist minister left in the cabinet, described the fall as the 'payment we have to make for the government's mistakes, payment for a certain deviation in financial policy over the past three or four months.'
The rouble's slide began late last month when the Central Bank all but withdrew from the market but it has steadily accelerated since. It crossed the the 3,000-per-dollar threshold on Monday and looks set to crash through 4,000 and, some dealers predict, 5,000 to the dollar by the end of the week. Boris Fyodorov, a former finance minister and a foe of Central Bank chairman, Viktor Gerashchenko, predicts a drop to 10,000.
The government, dominated since spring by centrist figures more sympathetic to Russia's agricultural and industrial lobbies, has relaxed a tight monetary policy that brought Russia back from the brink of hyper-inflation to a record low of 4 per cent in August. The rouble's fall will help exporters but will stoke inflation through more expensive imports.
Such axioms found little echo in Russia's State Duma yesterday. Politicians of all stripes saw conspiracy and searched for scapegoats. 'One should not look for an explanation in the economy or its laws,' said Ella Pamfilova, former social affairs minister and reformist deputy. 'The economy has always been subject to politics. There might be artificial political reasons. Our economy never develops according to expediency or commonsense.'
Veteran Communists, seeking to explain the new market by the old texts, targeted foreign capitalists as the culprit. 'I think it was done on purpose to allow foreign capital to buy our national property for free,' said Anatoly Lukyanov, chairman of Gorbachev's Soviet-era parliament. 'The Central Bank must take steps.'
Other opposition politicians reacted with barely disguised glee, seeing the rouble's troubles as a harbinger of political opportunities: 'The situation means we are on the eve of very serious political battles,' predicted Sergei Baburin, a nationalist deputy. 'After the rouble's fall there will be storms.'
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