Mr George Soros, the billionaire financier, yesterday warned that the turmoil in Russia's financial markets "has reached a terminal phase" and urged a devaluation of the rouble and the introduction of a currency pegged to the dollar or the euro.

Mr Soros, who made a fortune betting against the European exchange rate mechanism, has been a critic of fixed-rate currencies, and conceded that the currency board he proposes for Russia "is too rigid, and an arrangement that is too rigid is in danger of breaking".

In a letter to the Financial Times, Mr Soros said Russia would require $50bn of reserves to back a currency board, whereby it would be committed to exchanging roubles for dollars or euros at a set rate. He said this rate should be 15 to 25 per cent below the current exchange rate, to reflect the impact of the collapse in the oil price.

Russia has $17bn of reserves, and the International Monetary Fund and World Bank have agreed to provide a further $17bn of assistance. Mr Soros said the Group of Seven leading industrial nations should provide a further $15bn to shore up confidence in the new regime, and said any delay would be disastrous.

Mikhail Zadornov, finance minister, yesterday rejected any notion of devaluation, which would be disastrous for the many Russian corporations which have borrowed in dollars.