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The rouble gave up earlier attempts at recovery to head back towards record lows on Tuesday, threatening the living standards of ordinary Russians as the country was hit with a raft of harsh Western sanctions.
The currency had found some support after Russian authorities ordered exporting companies, among which are some of the world's biggest energy producers from Gazprom to Rosneft, to sell 80 per cent of their forex revenues on the market, as the central bank's own ability to intervene on currency markets was curbed.
But the rouble's brief gains had still left it well shy of the 75 to the dollar mark and 87 to the euro it traded at before Russia recognised two breakaway regions in eastern Ukraine and sent its troops into the neighbouring country last week.
The Russian currency had fallen 2.3 per cent to 96.80 against the dollar by 1053 GMT in Moscow, and lost 1.8 per cent to 107.87 versus the euro, slipping back towards Monday's record low of 122, reports Reuters.
Promsvyazbank said they expected the rouble to hold below 100 to the dollar on the local exchange on Tuesday.
On the EBS electronic trading platform, however, the rouble was pegged at 104 to the greenback, although still a distance from the all-time low of 120 hit on Monday.
The rouble will be steered by state measures to sell foreign currency on the domestic market and could even firm if people start selling dollars, fearing keeping savings in the US currency, said Dmitry Polevoy, head of investment at LockoInvest.
The rouble has tumbled since the start of Russia's invasion of Ukraine, at one point losing a third of its value, prompting the central bank to more than double interest rates to 20 per cent and adopt a range of other urgent measures. Read full story
"The substantial interest rate hike from the Bank of Russia failed to stabilise the rouble," said Piotr Matys, senior FX analyst at In Touch Capital Markets.
"The currency's moves are a clear indication that even such a drastic move is not sufficient to improve very negative sentiment towards the rouble, as it's impossible for foreign investors to invest in Russian assets."
Moscow calls its actions in Ukraine a "special operation" that it says is not designed to occupy territory but to destroy its southern neighbour's military capabilities and capture what it regards as dangerous nationalists.
Share trading on the Moscow Exchange was suspended for a second day after sharp sell-offs hammered the market since mid-February.
"The decision was very effective, as most blue chips are actively used in the REPO market, and a plunge may lead to margin calls," said Ararat Mkrtchian, co-founder of Russian index company Beta FT.
Russian authorities will also order temporarily curbs on foreign investors seeking to sell Russian assets, saying they wanted to ensure they take a considered decision not one driven by political pressure.
LIVING STANDARDS DAMAGED
The weak rouble is set to hit living stands in Russia and fan already high inflation, while western sanctions are expected to create shortages of essential goods that people in Russia have become used to, such as cars.
The Institute of International Finance (IIF), a trade group representing large banks, also warned that Russia was extremely likely to default on its external debts and its economy will suffer a double-digit contraction this year.
The central bank and the finance ministry did not reply to Reuters request for comment on the possibility of defaults.
Inflation will spike in the short term but over the longer term could slow as people in Russia switch to a money-saving mode, said LockoInvest's Polevoy.