Russia on Monday announced that it would hike its key interest rate to 17 percent, effective Tuesday, citing rising devaluation and inflation risks.
The bank had raised the rate to 10.5 percent last week in an effort to stem a run on its currency.
"This decision is aimed at limiting substantially increased ruble depreciation risks and inflation risks,'' the central bank said in a statement. The decision is effective starting Dec 16.
Earlier on Monday, the Russian ruble saw its biggest drop against the dollar since 1998. It strengthened after the rate decision and was last trading at 62.50 rubles per dollar, compared to 65.50 before the announcement.
The announcement comes on the back of a plunge in the price of oil—Russia's main export and revenue source. The country also faces headwinds from Western sanctions over its conflicts with Ukraine.