Russia’s central bank hikes interest rate as ruble hits record low

• The ruble plunged as much as 119.50 per dollar, a 30% fall from Friday’s close

• Domestic exporters are ordered to sell their foreign exchange revenues starting on February 28

The central bank of Russia on Monday hiked the country’s key interest rate to 20% from 9.5% after ruble, its currency, hit a record low.

The bank said that the rate hike “is designed to offset increased risk of ruble depreciation and inflation.”

The U.S. and Europe has levied many sanctions and penalties on Russia since its invasion of Ukraine resulting in fall of ruble against dollar.

The ruble plunged as much as 119.50 per dollar, a 30% fall from Friday’s close.

Also Read: US bans citizens from doing business with Russian central bank

The bank also ordered to halt foreigners’ bid to sell Russian securities. The stock and derivatives market of Russia is to remain shut on Monday.

Russia would release 733 billion rubles ($8.78 billion) in local bank reserves in order to increase liquidity, the central bank said. Russian banks said significant amounts of cash have been withdrawn in a very short time.

Forex sell-off

The Russian finance ministry and the central bank said in a statement on Monday that domestic exporters are ordered to sell their foreign exchange revenues starting on February 28.

Also Read: US halts operations at its Belarus embassy, advises non-emergency officials to leave Russia

Exporters are ordered to sell 80% of all their forex revenues received under export contracts.

Russian banks were banned from the interbank messaging system, SWIFT, over the weekend by the U.S. European allies and Canada.

SWIFT connects more than 11,000 banks and financial institutions in over 200 countries and territories.

With inputs from CNBC

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