The Russian ruble's slide and the country's economy are expected to worsen as oil prices tumble, according to the country's chief economist, upon news that the currency fell six per cent today.
"With current oil prices, expect things to get worse," said Dmitry Polevoy, who added that coupled with international sanctions, the "damage to the banking system and consumer sentiment will take a long time to repair."
The currency's fall on Monday was tied to a report by the Economic Development Ministry that revealed the economy shrank by 0.5 per cent in November compared to the same period one year ago, due to a drop in investment and manufacturing.
This marked the first drop in its gross domestic product since October 2009.
The report has also predicted a four per cent contraction in the economy next year and inflation exceeding 10 per cent.
In fact, the ruble has declined around 70 per cent since the start of 2014, due to sanctions imposed for Russia's involvement in Ukraine, coupled with a stark drop in oil prices after OPEC refused to cut output.
This has restricted the ability of Russian companies to borrow abroad, sparking a currency crisis.
In addition, the government has been dipping into the Central Bank's foreign currency reserve, which has now dropped below $400 billion US for the first time since August 2009.
In the past few weeks, the Central Bank has raised its key interest rate to 17 per cent, and has said it will offer dollar and euro loans to banks to help major exporters needing foreign currencies.
On Monday, Prime Minister Dmitry Medvedev announced he has signed a decree to provide a total of 1 trillion rubles ($19.6 billion US) to Russian banks.
Deputy Prime Minister Igor Shuvalov said the measures should help "the banking sector be more stable in the new circumstances and safeguard it from new shocks if they do occur," he was quoted by Tass as saying.