The Russian rouble opens almost 2 percent weaker, continuing to fall along with oil prices, which dropped to a new 12-year low on concerns about China's economy. As Sonia Legg reports, Russia's economic recovery and once-mighty war chest are now on the line.
He doesn't like to admit weakness. But even President Vladimir Putin is conceding the oil price rout is hurting Russia. (SOUNDBITE) (Russian) RUSSIAN PRESIDENT, VLADIMIR PUTIN, SAYING: "When oil prices are high it is very difficult for us to resist spending oil revenues to cover current expenses and our oil and gas deficit reached a rather dangerous level in my opinion and we have to lower it." There was no respite as Russian markets re-opened after the new year. The rouble edged even further down as oil prices touched 12 year lows. They're currently close to $30 - well below the $50 average Russia's government budgets for. Mike Ingram is from BGC Partners. (SOUNDBITE) (English) BGC PARTNERS, MARKET ANALYST, MIKE INGRAM, SAYING: "Every one dollar decline in a barrel of oil cuts about 2 billion dollars from Russian revenues so it has a direct fiscal effect." Russian stocks are also suffering from the slump in Asia. That might make the central bank nervous about intervening, says Vladimir Osakovsky, Merrill Lynch's Chief Russia Economist. SOUNDBITE (English) MERRILL LYNCH CHIEF ECONOMIST RUSSIA AND CIS, VLADIMIR OSAKOVSKIY, SAYING: "In this volatile environment I guess the one way of protection against the general market volatility would be to keep rates on hold at least for some time." The crisis has ravaged Russia's once mighty war chest -- accrued over 10 years of bumper oil earnings. Western sanctions over Ukraine haven't helped - and many see recession lasting until next year, despite Putin reportedly still having $100 billion in rainy-day funds.