Top White House economist Jason Furman says Russian economy ''on the brink of crisis.'' Rough Cut (no reporter narration).
ROUGH CUT (NO REPORTER NARRATION) STORY: The Russian economy is "on the brink of crisis," said Jason Furman, the Chairman of the Council of Economic Advisers. Furman told a White House briefing that Russia is "between a rock and a hard place in economic policy." The rouble plunged more than 11 percent against the dollar on Tuesday in its steepest intraday fall since the Russian financial crisis in 1998 as confidence in the central bank evaporated after an ineffectual rate hike. The rouble opened around 10 percent stronger against the dollar after the central bank unexpectedly raised its benchmark interest rate by a hefty 650 basis points to try and halt the currency's slide, but it reversed gains in volatile trade and repeatedly set new record lows. It has now fallen close to 20 percent this week, taking its losses this year against the dollar to more than 50 percent and stirring memories of the 1998 crisis when the currency collapsed within a matter of days, forcing Russia to default on its debt. The rouble has been hammered by the slump in oil prices and Western sanctions imposed over Russia's involvement in Ukraine, but its sharp decline over the past two days also reflects declining confidence in the central bank. President Vladimir Putin has blamed both the slide in oil and the rouble on speculators and the West. A weak rouble poses a major test for Putin, since his popularity in part depends on his reputation for guaranteeing prosperity and stability, and it stokes inflation.