The Russian ruble on Monday extended the previous week's losses to reach new three year lows as alarm grew over the effects of the eurozone crisis and the falling oil price on the currency.
Prime Minister Dmitry Medvedev Saturday ordered the central bank to step up interventions as authorities worried that a sharp depreciation could harm economic stability that is the cornerstone of President Vladimir Putin's rule.
The pressure on the ruble, the most serious since it came under sustained attack by speculators in the 2008-2009 financial crisis, has been sparked largely by investors fleeing to safe havens due to the eurozone crisis.
But there are also concerns over the effects of the falling price of oil on the Russian budget and investors are also extremely worried by capital flight from Russia which amounted to $35 billion in the first quarter alone.
In currency trading in Moscow at 0730 GMT, the ruble ticked up 31 kopecks against the dollar to 33.99 rubles and gained 55 kopecks against the euro to 42.20 rubles.
The ruble trades within a floating corridor which is fixed at between 32.15 rubles and 38.15 rubles against a euro/dollar currency basket which is made up of 0.45 euro and $0.55.
With the ruble nudging its upper ceiling against the currency basket, Medvedev said that the central bank had to ensure that the currency stayed within the set band.
On Monday the ruble was trading at 37.52 rubles to the currency basket, just below the 38.15 ruble ceiling.
Analysts said that the central bank had in May surprised the market by easing up on interventions to support the ruble, in a move seen by some as a sign it was prepared to let the ruble lose value.
However Medvedev's stern intervention at the weekend has made clear the government does not want the currency to break through the ceiling, which could irk consumers at a time of rare protests against the Kremlin.
"We are concerned that the decision to protect the ruble exchange rate will result in significant acceleration in capital outflow and will drive additional pressure on the interbank market," said analysts at Alfa Bank.