Coming soon: Capital controls in Russia?

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With Russia's emergency rate hike failing to arrest the ruble's meltdown, authorities may soon be forced to roll out capital controls, say analysts.

"Further depreciation pressure suggests that rate hikes and FX intervention may not be enough. At the current juncture, the odds of targeted capital controls are increasing significantly," Sébastien Barbé, head of EM research and strategy at Credit Agricole wrote in a note.

The battered currency has continued in its downward spiral despite the Central Bank of Russia's (CBR) astonishing 650 basis-point rate hike late Monday.

Read MoreWhy Russia's monster rate hike spells trouble ahead

The ruble on Tuesday plunged more than 11 percent against the U.S. dollar – its steepest intraday fall since 1998 –before paring some losses on a bounce in oil prices. It last traded around the 71.7 level.

A further decline in oil prices could intensify worries among Russian corporates and households, leading to a greater threat of dollarization and forcing authorities to consider measures to cap expectations of bank runs, said Barbé. Dollarization is the process by which a country abandons its own currency and adopts a more stable foreign currency as its legal tender.

While CBR and the Russian government have so far denied that capital controls are under consideration, options that are available include compulsory repatriation of export proceeds and their conversion into local currency, limits on conversion from local currency into dollars, as well as limits on daily withdrawals from bank accounts.

What else can authorities do?

Daniel Hewitt, senior emerging-market economist at Barclays has not ruled out the possibility of supplementary rate hikes, further interventions in the foreign exchange market and capping ruble liquidity.

Read MoreNothing Russia can do for ruble if oil keeps falling: Pro

"The generous provision of [ruble] liquidity has fueled [ruble] sales against the USD. Thus, the CBR can limit demand for FX by limiting [ruble] liquidity,"he said.

"While it is unclear what actions the CBR will take, the ferocity of the [ruble] sell-off is such that it will need another 'big-bang' policy to take control of the [ruble] markets," he added.

Russia in 'full-fledged currency crisis': Pro
Russia in 'full-fledged currency crisis': Pro   

As for capital controls, Hewitt says selective and well-designed measures could make sense given Russia does not need capital inflows but rather needs to slow capital outflows.

Read MoreFed, oil and Russia behind Tuesday turmoil

"Use of capital controls is not necessarily bad in and of itself. Selective capital controls could help force the economy back into [ruble] transactions, preventing dollarization," he said.

Not your typical EM crisis

Analysts say Monday's rate hike failed to reassure investors because the Russia's crisis is being driven by persistent weakness in oil prices, a factor out of the country's control.

"Usually, in responses to EM crises, big rate hikes come hand in hand with other measures aimed at putting the economy back on a more sustainable path and reassuring investors. However, this is not possible in the case of Russia today," Barbé said.

Read MoreBeware: Putin, the wounded animal

"For Russia, at this stage, it is not at all a question of structural reforms or controlling the budget deficit, it is more about hoping that oil prices will rebound," he added.