Vladimir Putin
Russian President Vladimir Putin. Reuters

Russia's ruble fell to an all time low against the US dollar amid fears over the impact of sanctions imposed by the European Union and the United States.

The ruble fell to 38.7 to the dollar on Tuesday, although it was trading at 38.5 to the dollar at 12:40 BST, marking its lowest level against the greenback since 1998.

The latest round of sanctions, passed on Friday, targeted Russia's energy and defence sectors. The measures restrict companies access to Western capital markets, while arms deals with Russia were also prohibited in the latest measures.

The EU and US first passed sanctions against individuals and companies with close ties to the Kremlin after Russia annexed the Black Sea peninsula of Crimea in March.

The Western allies have passed increasingly tough economic penalties on Moscow as violence in eastern Ukraine has escalated, accusing the Kremlin of providing fighters and weapons to the separatist rebels.

Both the US and EU said the latest sanction could be lifted if Russia withdrew its troops from Ukraine. For its part, Moscow has denied sending troops into eastern Ukraine.

The ruble has fallen since the start of the crisis, as a worsening investment climate and the falling price of oil - Russia's biggest export - have weighed on the currency.