The Central Bank of Russia has hiked its key interest rate to 17 per cent from 10.5 per cent effective Tuesday, after the rouble's worst one-day drop in 16 years.
The rouble tumbled 10 per cent today amid concerns over the impact of falling oil prices on Russia's heavily oil-dependent economy.
The central bank said in a statement:
The decision was driven by the need to limit the risks of devaluation and inflation which have recently increased significantly.
Russia has recently been on a rate-hike binge, raising rates six times this year, in its battle to stop the rouble plunging to new depths and rein in worryingly high levels of inflation.
Last week it raised the main interest rate by one percentage point to 10.5 per cent and warned of further increases if inflation continues to rise. The central bank had already raised the key interest rate to 9.5 per cent from eight per cent just six weeks earlier.
Throughout this year Russia's economy has been crippled by a toxic cocktail of Western sanctions and crumbling oil prices.