Russia's credit rating has been downgraded to junk status by the Standard and Poor's ratings agency, as a dramatic collapse in oil prices has hit the energy producer hard.
S&P said the downgrade to junk was caused by a weakening of the country's financial system and specifically less flexibility to manipulate interest rates.
Russia's central bank "faces increasingly difficult monetary policy decisions while also trying to support sustainable GDP growth," the ratings agency said. "These challenges result from the inflationary effects of exchange rate depreciation and sanctions from the west as well as a counter-sanctions imposed by Russia."
Russia's sovereign debt rating was now on a par with Bulgaria and Indonesia and sees Moscow below investment grade for the first time in a decade.
Russia's ruble slid on the back of the announcement and was trading at 68.1 to the dollar on Monday morning in London.
The ratings agency put Moscow's debt on a negative outlook, citing fears that the central bank had little room to move interest rates if exchange controls are imposed.
"We could lower the ratings if external and fiscal buffers deteriorate over the next 12 months faster than we currently expect," it said.
The move reflected "excessive pessimism," said Russian finance minister Anton Siluanov.
There's no need to dramatise the situation. The decision shouldn't have a further serious impact on the capital market because the market participants already priced in the risks of a downgrade to Russia's credit rating," he said in a statement.
Russia has struggled to contain the currency crisis that saw the ruble end 2014 as the second-worst performer, after Ukraine's hyrvnia.
The ruble's slide has roughly mirrored that of oil prices, which have slumped 58% since the summer of 2014.
Oil and gas exports account for two-thirds of Russia's total export revenues, while revenues from these exports are used to fund around half of the state's annual budget.