MOSCOW - Russia on Tuesday appeared headed for the worst economic turbulence in President Vladimir V. Putin's 15 years in power, raising fundamental questions on the future of the country as investors' trust in its basic institutions seemed to be eroding fast.
The fear was fueled by the tumbling ruble, down 17 percent against the dollar in two days despite a dead-of-Tuesday-night decision by the central bank to impose a steep interest-rate hike to stem currency losses.
Putin remains hugely popular in Russia, but his rule has long been predicated on a basic bargain with voters: They gain economic prosperity and stability in exchange for acquiescence to a political life devoid of real opposition.
At one point Tuesday, a dollar could buy 79 rubles, an extraordinary development for a currency that stood at 33 rubles to the dollar in January. Later Tuesday, the currency stabilized closer to 68 to the dollar.
The crisis consumed the attention of Russia's elite Tuesday. Some analysts wondered whether the central bank president or other senior leaders might soon be replaced.
The sharp interest-rate hike - from 10.5 percent to 17 percent - promised to throw Russia's economy into a deep recession next year, and it was a sign that Russian policymakers feel they have few options left to fight the crisis.
On Tuesday, top economic officials said, in effect, that Russians would simply have to get used to worsened living standards.
Putin did not publicly address the crisis Tuesday, but his spokesman said that much of an annual news conference to be held Thursday would be devoted to the economy.
Russia's economy was already in trouble before the March annexation of Ukraine's Crimean peninsula and subsequent support for pro-Russian rebels in eastern Ukraine. Those decisions sparked Western sanctions and the worst tensions between Russia and the West since the Cold War. The unpredictable environment has spooked investors, which the central bank predicts will pull $128 billion from Russia this year.
The rapidly souring economic conditions, also fed by sinking oil prices, may spur Russia to be more conciliatory on Ukraine. On Tuesday, Foreign Minister Sergei Lavrov reversed a call for Kiev to cede more power to Ukraine's regions, a basic Russian demand since pro-Moscow Ukrainian President Viktor Yanukovych was toppled in February.
"This is for Ukrainians to decide," Lavrov said in an interview with France 24 television. A new cease-fire in Ukraine's east that started last week appears to be mostly holding.