Russia's Central Bank disclosed the scale of its efforts to defend the rouble today, admitting that it had spent $57.5 billion in two months to prop up the currency.

The Kremlin insisted that there would be no devaluation despite the Bank's decision to widen the trading band for the rouble against a basket made up of dollars and euros. The move effectively cut the value of the rouble by 1 per cent, sparking fears in markets that the authorities plan to let it slide further as plunging oil prices take their toll on Russia's economy.

Yet President Medvedev's economic adviser, Arkady Dvorkovitch, ruled this out. He said: "There is no reason to devalue even if oil prices are low. There will not be a devaluation. The Central Bank is in complete control of the situation on the foreign exchange market."

Russian Newsweek reported that the government was willing to allow the rouble to fall to 30 against the dollar by the end of the year and to 35 by May. It cited government sources as saying that a "soft devaluation" was under way.

The spectre of a devaluation haunts ordinary Russians who recall the financial meltdown in 1998 when the rouble lost two-thirds of its value overnight as the country defaulted on its foreign debt. Exchange rates at street vendors have already slipped to around 28 per dollar as Russians convert some of their roubles just in case.

Fear of social unrest and a return to the economic chaos of the 1990s also underpins the government's determination to support the currency and allay fears of devaluation. But the cost of the exercise appears to be forcing a re-think.

Alexei Kudrin, the Finance Minister, said that the government would guarantee the stability of the rouble "taking into account the fundamental indicators of our economy". He said that the Central Bank had been right to permit the rouble to slip to prevent a continuing drain on Russia's foreign reserves.

Sergei Ignatiev, the Central Bank's chairman, said that gold and currency reserves fell by a fifth, or $97.5 billion, in September and October. The reserves are down to $475 billion from a peak of almost $600 billion in August.

He told the Duma that $57.5 billion had been spent defending the rouble's value, which is measured against a basket of 0.45 euros and 0.55 dollars. Another $14 billion had been used to bail out banks and $30.1 billion had been lost in a revaluation of currencies.

The Bank holds 45 per cent of the reserves in US dollars, 44 per cent in euros, 10 per cent in pounds sterling, and one per cent in Japanese yen. Mr Kudrin told deputies that Russia had "paid for the stability" in the rouble with a reduction in reserves.

"The Central Bank is carrying out a mild widening of the rouble corridor. This is normal, this will allow us to keep the exchange rate stable and to spend less reserves," he said.

He added that Russia had spent 90 billion roubles ($3.28 billion) out of a planned 250 billion roubles for purchases of shares and bonds to support the domestic stock markets.

Russia's stock markets have taken a hammering in the global financial crisis, falling by more than 70 per cent. Even wealthy oligarchs like Oleg Deripaska have been forced into a desperate hunt to refinance foreign loans as the collateral value of their shares plummeted.

The World Bank this week predicted a tough 2009 for the Russian economy and halved its growth forecast to three per cent. Zhelko Bogetich, the Bank's chief economist for Russia, told reporters that the economy and the rouble remained heavily dependent on oil prices. He said: "Now we see the actual depreciation of the rouble and we think it will actually continue."

Explore Economics

• Pre-Budget Report 2008

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts