The ruble dropped 25 points to 2,668 per U.S. dollar Tuesday on the Moscow Interbank Currency Exchange, and dealers pointed to heavy trading and massive Central Bank intervention as evidence that the Russian currency could fall sharply again this week.


"The volume is what worries me," said Igor Doronin, currency expert at the exchange. "It is truly a serious situation. Demand is still rising."


Initial demand for $349.45 million outpaced initial supply of $319.55 million, which dealers said came almost entirely from the Central Bank. Gross trading volume was $311.10 million.


"The Central Bank accounted for almost all of the sales volume," said Yevgeny Rogachyov of Menatep bank. "It's completely abnormal -- I don't know how it will end."


He said that as of Tuesday evening, the ruble had fallen to 2,705 per dollar in private interbank trades.


Doronin speculated that the Central Bank, after allowing the ruble to lose more than 21 percent of its value against the dollar over the past month, was trying to stabilize the currency to help boost demand at the government's next treasury bill auction. The government plans to sell 1 trillion rubles in three-month T-bills Wednesday.


During periods of instability on the hard currency market, demand tends to be low for government securities since buying dollars is more profitable. Doronin said that the flood of money to the hard currency market Tuesday had already pushed secondary T-bill yields above the Central Bank's annualized refinancing rate of 130 percent.