An emergency midnight meeting of the central bank. A 6.5 percentage point increase in interest rates. A rouble in free fall. Reports of Muscovites taking their money out of cash machines. This is what a currency crisis looks like.

Sergei Shvetsov, deputy governor of Russia’s central bank, summed it up. The bank, he intimated, would rather not have pushed the economy closer to a deep slump by hiking borrowing costs but could not sit back and do nothing as the rouble crashed. “Believe me, the choice that the central bank council made yesterday was a choice between the very bad and the very, very bad,” Shvetsov said. In the end, Moscow got lucky. It was just a very bad day.

Clearly, the attempt at “shock and awe” by pushing interest rates up from 10.5% to 17% in one go failed. The rouble ended another turbulent day’s trading below where it started and plumbed new record lows against the dollar. Russia has spent the past nine months fighting an economic war against the west – and Tuesday 16 December was the day that war was lost.

Put simply, this was Moscow’s Norman Lamont moment. Back in September 1992, the then chancellor said he would defend the pound and keep Britain in the exchange rate mechanism by raising official borrowing costs to 15%, even though the economy was in deep trouble at the time.

Russia is in even worse shape than Britain was in 1992. With a clapped-out manufacturing sector, it is too dependent on its massive stocks of oil and gas at a time when the price of oil is falling through the floor.

A barrel of Brent crude was trading at below $60(£38) a barrel at one point on Tuesday, compared with a recent peak of $115 in the summer.

The west knows all about the vulnerability of Russia’s economy, its creaking factories and its over-reliance on the energy sector. When the introduction of sanctions over Russia’s support for the separatists in Ukraine failed to bring Vladimir Putin to heel, the US and Saudi Arabia decided to hurt Russia by driving down oil prices. Both countries will face some collateral damage as a result – and this could be considerable in the case of the US shale sector – but both were prepared to take the risk on the grounds that Russia would suffer much more pain. This has proved to be true.

Now for the good (or perhaps less bad) news. Eventually, lower oil prices mean stronger global growth, because consumers will have more money to spend and businesses will have more spare cash to invest. At that point, the price of oil will rise and the rouble with it.

Even so, Russia looks vulnerable. It has reached the end of the road with interest rate increases and has only two options: to allow the rouble to find its own level, in the hope that declining oil prices will prove temporary or to introduce capital controls. These are seen very much as a last resort by Moscow, but may prove necessary if the rouble rout continues.

The phrase “perfect storm” is over-used, but the combination of a collapsing currency, a collapsing economy and punitive interest rates make it apposite. The question now is how Putin responds. If he softens his line over Ukraine, the west’s gamble will have paid off and it will be mission accomplished. But there are hardliners in Moscow who will argue that the response to the crisis should be a siege economy and the ratcheting up of military pressure on Ukraine. If economic agony makes a wounded Russian bear more belligerent, it will prove a hollow victory.