Russia's central bank disclosed the scale of its efforts to defend the rouble yesterday after admitting that it had spent $57.5 billion (£38.1 billion) in two months to prop up the currency.

The Kremlin insisted that there would be no devaluation, despite the central 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.

Arkadi Dvorkovich, President Medvedev's economic adviser, ruled that out yesterday. 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 ease fears of a devaluation.

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 chairman of the central bank, said that gold and currency reserves had fallen 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.

Mr Kudrin told deputies that Russia had “paid for the stability” in the rouble with a reduction in reserves. He added that Russia had spent 90 billion roubles (£2.2 billion) out of a planned 250 billion roubles for purchases of shares and bonds to support the domestic stock markets.

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