MOSCOW: Russia’s emergency move to raise interest rates failed on Tuesday to arrest the ominous collapse of the rouble as the currency accelerated its slide and broke the 70 rouble-to-dollar mark.

The slide to 73 roubles to the greenback and over 90 to the euro came after a brief rally came after a drastic late night hike by the central bank of its key rate to 17 per cent from 10.5pc.

The rouble has now lost more than half its value since the start of the year amid collapsing oil prices and Western sanctions over Russia’s support for the separatist uprising in eastern Ukraine.

The collapse of the rouble reflects what many economists call a crisis of confidence in the Russian economy amid the Kremlin’s confrontation with the West.

The worsening economic outlook presents a serious challenge for President Vladimir Putin, whose social compact with Russians has been based on years of economic stability and relative prosperity.

“This is a major problem: the government obviously is not keeping up with the negative consequences of political decisions,” said Nikolai Petrov, a professor at the Moscow-based Higher School of Economics.

“It is important not to allow the panic to spread among people.” Konstantin Kalachev, head of the Political Expert Group think tank, said Russians’ deteriorating livelihoods would deliver a body blow to Putin, whose approval ratings have been sky-high following a patriotic surge after the seizure of Crimea in March.

“A collapse of Putin’s 1ratings in 2015 is unavoidable,” Kalachev told AFP.

The Russian currency hit a low of 64.4 roubles on Monday evening, sliding 9.5pc in a single day, its largest one-day fall since the 1998 crisis.

Published in Dawn, December 17th, 2014