Acting premier, Mr Viktor Chernomyrdin promised radical measures yesterday to pull Russia out of a breathtaking financial tailspin, but the rouble and stocks scarcely took notice as they plumbed new depths.
Stressing that it was impossible to repair Russia's shipwreck of an economy with orthodox policies, Mr Chernomyrdin was set to unveil "sensational" steps today as he detailed his panacea for Russia's ills to a sceptical parliament, government sources said.
But the acting premier faces almost insuperable opposition in parliament to his candidacy and details are still extremely sketchy on his economic cure-all.
Mr Chernomyrdin has hinted that the central bank money presses could print Russia's way out of trouble, but his chief financial cohort, interim deputy premier Mr Boris Fyodorov, has come out in favour of the fiscal rectitude which a currency board could instill.
Mr Domingo Cavallo, the architect of Argentina's financial stabilisation who has been asked to advise the Russian government, warned yesterday that, unless the weakened authorities summoned the will to implement radical measures soon, the country risked sinking into hyperinflation.
"The situation is very serious. They have to act immediately. They do not have a lot of time," Mr Cavallo, the former Argentine economics minister, said. "Otherwise, the depreciation of the currency will produce accelerated inflation and accelerated inflation may well produce hyperinflation."
Amid such uncertainty, the rouble had little cause to rally and slumped a further 5 per cent to 13.46 to the dollar. The currency has now lost more than 50 per cent since it was unhooked from its safe mooring against the dollar on August 17th and the knock-on effects were felt far and wide yesterday.
Ordinary Russians scrambled to save their rapidly diminishing rouble deposits, poring over a new central bank ordinance instructing banks to allow them to switch funds to guaranteed accounts at the Sberbank savings bank.
Russian stocks found little to cheer about and set a new all-time closing low on microscopic volumes. Traders said that investors could hardly be expected to start buying.
The worst might yet be to come, warned leading Russian economist, Mr Andrei Illarionov, stressing that the relentless slide of the rouble was pushing the government ever closer to defaulting on $140 billion (£96.3 billion) of foreign debt, as yet still intact despite a domestic debt default announced last month.
With their deposits rapidly being eroded by the disappearing currency, ordinary Russians packed retail banks yesterday morning to take advantage of the central bank move to allow them to transfer funds to Sberbank, the country's largest bank, where savings are guaranteed by the state.
Banks however squealed that the move would deprive them of their life blood, would penalise depositors in the transfer commission and terms, and could actually be illegal.
