Russia's Finance Ministry said on Wednesday it was starting to sell its leftover foreign-currency stock and that it considered the ruble to be undervalued.
Separately, Prime Minister Dmitry Medvedev called on Russia's top exporters to behave "responsibly" and manage their foreign currency revenues in a way that would not boost ruble volatility, the government's press office said. At a meeting with Russian exporters, Medvedev also told First Deputy Prime Minister Igor Shuvalov, along with the central bank, to monitor the flows of foreign currency revenues on the market daily.
The Finance Ministry said it was selling foreign exchange currency from its leftover stocks, of which it has around $7 billion, according to Reuters. The ministry did add in a statement that it considered the ruble "extremely undervalued," however.
A combination of sanctions imposed by the West on Russia for its intervention in the crisis in Ukraine, economic problems at home and the continuous slide in the price of oil have all contributed to the ruble's recent troubles.
The announcement of the intervention immediately sent the ruble higher against the dollar, and after a volatile trading day was up 10 percent versus the greenback.
Head of emerging markets research at Standard Bank, Timothy Ash, called the move "totally weird."
It marked the second state intervention in almost as many days after the Central Bank of Russia (CBR) unexpectedly hiked rates by 6.5 percentage points to 17 percent in the wee hours of Tuesday, Moscow time, to stem the beleaguered ruble's plunge.
Ahead of the reserves sell-off, the ruble had hit lows not seen since the country's devaluation crisis in 1998. The currency's problems had promoted several analysts to warn of capital controls to limit the damage.
"This is unbelievable stuff...the Ministry of Finance has $7 billion to sell in 'residual accounts.' I thought this was the job of the Russian Central Bank to manage the exchange rate. And why if the CBR has $413 billion in reserves, is the MOF being called on to put its hand in its pocket for some small change?," he said in a note following the move.
"I don't think I have ever seen any currency go through such extreme gyrations in all my time in the industry," Ash said, adding, "The ruble is fast becoming untradable - maybe that is what the CBR wants."
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Adding to Russia's woes was the announcement by the MCSI emerging markets index that said it could exclude Russia from the index in the event of the government implementing capital controls or foreign exchange controls. According to Reuters, MSCI said it could reclassify Russia to "standalone market" status, a move that could serve to further isolate Russia from international investors.
- Reuters contributed to this report