The Russian economy moved closer to the brink yesterday after "shock and awe" action by the central bank, which raised interest rates to 17 per cent, failed to stem the decline of the Russian rouble.
Today's announcement that the finance ministry would start selling off foreign currency reserves in order to boost the value of the rouble had some effect, but not enough to end the crisis.
"The situation is critical," the central bank's vice-chairman, Sergei Shvetsov said. "What is happening is a nightmare that we could not even have imagined a year ago."
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Tough Western sanctions and falling oil prices have cost the Russian economy $140bn (£89.2bn) this year, the country's finance minister Anton Siluanov said at an international financial and economic forum in Moscow last month. But how has Western action affected Russia?
What sanctions have been imposed?
Since Russia's annexation of Crimea, the EU and US have gradually ratcheted up sanctions on Moscow, by blacklisting Russian officials and firms accused of undermining Ukraine's independence.
On 12 September, the EU announced measures to target Russia's state finances, as well as its arms and energy sectors, the BBC reports. The measures have made it hard for companies to trade with the West or secure dollar or European funding.
Individuals in Russian president Vladimir Putin's inner circle have also been targeted with Western asset freezes and travel bans.
Some of the companies targeted by US sanctions include Russia's biggest bank Sberbank, as well as Gazprombank and Vnesheconombank. Commodity giants Rosneft and Novatek and the defence conglomerate Rostec have also been affected.
Are the sanctions working?
Sanctions alone have not directly brought about Russia's economic woes, but they have made the country more susceptible to other economic blows, a spokesman for David Cameron told the Daily Telegraph.
"Russia has made itself more vulnerable to economic shocks that major oil producers may face as a result of fluctuations in the oil price, as a result of the relative isolation through sanctions that it has faced because of events in Ukraine."
According to Bloomberg, Russian billionaires have also lost $51.4bn (£32.6bn) this year. Sanctions, in conjunction with the decline of the rouble mean that of the 15 Russian billionaires profiled by Bloomberg only one, Oleg Deripaska, has become wealthier in 2014.
What does Russia say?
Russia's Foreign Minister Sergei Lavrov told France 24 that the sanctions would only serve to strengthen the country's resolve.
"Russia will not only survive but will come out much stronger," he said. "We have been in much worse situations in our history and every time we have got out of our fix much stronger."
Lavrov expressed his contempt for Western-imposed sanctions but insisted they would not damage Russia in the long run.
"Of course sanctions hurt, but I don't believe the sanctions will help the European Union. The United States ordered the EU to impose sanctions and frankly we have overestimated the independence of the European Union [from the US]."
He added: "Sanctions are a sign of irritation, they are not the instrument of serious policies," he added.
When will the sanctions be lifted?
The White House has said it does not intend to ease sanctions to help Russia stem its economic freefall. "It is president Vladimir Putin's decision to make. The aim is to sharpen the choice that he faces," a spokesperson said.
