Investing.com - The Central Bank of Russia hiked its benchmark interest rate on Thursday, as concerns over its weakening currency mounted amid ongoing turmoil in the oil market.
The CBR said it was raising the benchmark interest rate by 100 basis points to 10.50% in December from 9.50% in October. Most analysts expected an increase of 75 basis points to 10.25%.
The deposit rate rose to 9.5% from 8.5%, while the one-week repo rate increased to 11.5% from 10.5%.
USD/RUB traded at an all-time low of 55.24 following the announcement from 54.89 earlier.
The ruble has come under heavy selling pressure this year amid ongoing tensions in eastern Ukraine and broad based risk aversion towards Russia, as well as the falling price of oil, Russia’s main export.
Sanctions imposed on Russia by the U.S. and the European Union for what they say is its role in backing separatists in eastern Ukraine have weakened the ruble, caused a spike in inflation and have almost completely shut Russian companies out of the global financial markets.
Last month, Russia's central bank said it was abandoning the ruble’s trading band and would allow the exchange rate to float freely. The bank added that it would intervene in the foreign exchange market at any time if it saw any threat to financial stability.