The deputy chairman of Russia's central bank has conceded the rouble is in deep trouble but says it will take action to remedy the problem soon.
"The situation is critical. We could not imagine this in our worst nightmare a year ago," Sergei Shvetsov was quoted by the Russian news agency Interfax as saying.
He said the shock overnight hike in its key interest rate from 10.5% to 17% "will be followed by other measures to stabilise the situation".
Despite the increase the rouble continued to fall sharply throughout the day, hitting the 80 to the dollar mark and decreasing in value by 20% in a matter of hours.
"Trust me, the choice the central bank's board of directors made was one between bad and much, much worse," Mr Shvetsov added.
"In the coming days, the situation will be comparable with the toughest period of 2008. I think that the experience we accumulated over the past crises will help us find the right solution and survive this situation. I very much hope so."
The Bank of Russia's shock decision to up its core rate was a response to the rouble's value sinking by almost 50% over the course of the year - hit by Western sanctions imposed over the Ukraine conflict and plummeting oil prices.
It was also intended to settle nerves back home as fears grow that the extent of Russia's economic problems - largely unreported by state media - could spark panic among consumers as price rises become unmanageable.
By raising interest rates, the bank also hoped investors would find it more financially appealing to keep their money in Russia, whose economy relies heavily on oil revenues.
Central bank chairwoman Elvira Nabiullina said earlier the move should stem inflation, although she admitted it will take the rouble "some time" to find its correct value.
Russian stocks fell slightly on Tuesday morning with the MICEX benchmark 1.5% lower, reflecting the additional pressure on businesses.
Falls of more than 50% in world oil prices are tipped to plunge Russia into recession next year.
On Tuesday the value of Brent crude slipped to new five-year low, falling below $60-per-barrel for the first time since July 2009.
The Bank Of Russia had raised the rate from 5.5% earlier this year to 10.5% just last Thursday.
It said then that it expected inflation to run at 10% this year and climb higher in the first quarter of 2015.
But the rouble has plunged further against the dollar this week, to 65 on Monday and then 80 on Tuesday, after dropping from 55 roubles last week.
Alexei Kudrin, Russia's finance minister from 2000-2011, said on Twitter: "The fall of the rouble is not just a reaction to low oil prices and the sanctions but also (a show of) distrust to economic policies of the government."
He called on Russian president Vladimir Putin to take appropriate measures, although he did not specify what these should be.
Moscow's involvement in Ukraine has led to the US and the European Union imposing a range of sanctions which have added to Russia's economic woes.
These have included blocking Western financial markets to key Russian companies and limiting imports of some technologies.
Further sanctions are likely after the US Congress passed legislation on Monday that could see Washington providing weapons and other assistance to Ukraine.
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