The Central Bank, trying as it was to catch a falling knife, had very little choice but to ramp up interest rates on Tuesday.
It's attempt to stop the Rouble's rapid descent, however, failed miserably. The currency has lost more than 50 percent of its value, which will lead to a crippling rise in the cost of imports.
Western sanctions have made their point: President Vladimir Putin will not get away with his annexation of Crimea and his meddling in Ukraine.
It is a heavy penalty for the Russian people. Many have taken out mortgages in dollars, meaning their repayments doubled in the last 10 months.
Gas giant Gazprom slipped out a statement on Tuesday saying it would fire up to 25 percent of its workforce – Gazprom employs in excess of 500,000 people.
But the West could also pay a heavy price.
Russian corporations have taken on debt from Western institutions. It's estimated that these Russian companies need to repay $650bn, and as they are shut out of international markets they can't refinance their debt.
It's often been mentioned that Putin could use defaulting on loans to punish the West. We'll see.
Angela Merkel's Germany could be one of the nations hardest hit by the fallout from Russia's financial meltdown. German industry is the biggest trading partner with Russia, more than 350,000 jobs are tied to trade between the countries.
Beyond that, more than 6,000 German companies have registered offices in Russia with a combined turnover of €40bn and employing 270,000 people.
Russia has built up a pretty impressive currency reserve. Now it is deploying that reserve to protect its economy, which the central bank expects to sink by as much as 4.7 percent next year. It’s spent well in excess of $80bn dollars defending its currency.
The question is how much more it is will to spend of the $416bn dollars it has left.
The next stop could be capital controls. That would stop the bloodletting.
It’s not only Russia that’s taking a hit from sanctions. With oil prices collapsing to possibly 40 dollars a barrel, we may be filling up cheaply but we’re all in for a bumpy ride.
When sentiment sours, it hurts emerging markets as money pours into safer investments and locations. Turkey and Indonesia have seen their currencies hit multi-year lows. They're only recourse to scrap much needed infrastructure projects and social spending.
No nation is an island, having seen the size of its economy sink from $1.2 trillion to $1 trillion in one day, Putin can no longer blame "currency speculators" for this crisis.