Russian Government Invest in Securities

The money will add to the more than $200 billion that the government has set aside for the financial sector, $86 billion of which has been allocated to boost banks' liquidity.

Still, economists and analysts say the measure will have little effect on the market unless it is immediately detailed and put into action.

The Central Bank garnered a more optimistic response to an announcement Friday that it would downgrade the rating levels banks need to receive state funding. Russian banks can now receive loans with securities as low as B- on Fitch Ratings and Standard & Poor's, and B3 on Moody's.

Speaking to a group of lawmakers, Kudrin said the stock indexes' wild swings were a result of Russia's "weak financial system" and that the country's stocks would continue to decline because of increasing "risks on the global market," Interfax reported.

Both the MICEX and RTS dropped sharply after Kudrin's less than reassuring words, with the MICEX falling more than 5 percent from Thursday's close after a 6 percent lead in the morning. The ruble-denominated index recovered slightly to finish the day down 4.3 percent at 599.6 points.

Rory MacFarquhar, senior economist at Goldman Sachs, said oil prices would continue to determine the direction of the market.

"Until we have some clarity about where the oil price is going to land, it's hard to declare that [the Russian market] has reached the bottom," MacFarquhar said.

As Russian newspaper The Moscow Times reports, Kudrin's move is seen by some observers as a defense of the welfare fund before its resources were invested in the volatile, sinking market.

Author: Kochneva Ksenia