Russia's national currency sank to new lows against the dollar and the euro despite the central bank dramatically raising a key interest rate overnight.
The ruble was trading at close to 80 rubles to the dollar and 100 to the euro in the afternoon of December 16 in Moscow, about a 20 percent decline on the day.
The ruble suffered a 10 percent decline on December 15, and the central bank hiked its key interest rate to 17 percent from 10.5 percent overnight.
The head of Russia's central bank, Elvira Nabiullina, said on December 16 that the ruble is "undervalued" but that it "needs time to reach its fundamental rate."
She also said the "rather difficult situation" calls for "coordinated actions" by the government and the central bank. She said that bank should be involved in preparing tax and tariff policies in order to combat inflation.
Prime Minister Dmitry Medvedev said he will hold a special round-table discussion later on December 16 to discuss the financial situation, Interfax reported.
Russia's currency, which has been battered by low world energy prices and by Western sanctions imposed over Moscow's interference in Ukraine, has lost more than 50 percent of its value this year.
Russia requires about $100 per barrel of oil to balance its federal budget.
Benchmark Brent oil fell below $60 per barrel in morning London deals on December 16, hitting a low last seen in July 2009.
Russian Energy Minister Aleksandr Novak said on December 16 that Russia would not cut back on oil production in a bid to stabilize prices and would not call on OPEC to do so either.
The central bank said late on December 15 that the Russian economy may shrink 4.5 percent to 4.7 percent next year, the most since 2009, if oil averages $60 a barrel under a "stress scenario."
The central bank also said capital flight from the country may reach $134 billion by the end of the year.
Russian industrial output shrank in November for the first time in 10 months in a result seen as linked to the declining ruble.
The turmoil in Russia caused European markets to fall slightly. Companies with significant exposure in Russia -- such as Austria's Raiffeisen Bank, Finland's Nokian tiremaker, and Danish brewer Carlsberg -- suffered setbacks of between 3 and 5 percent.