THE Russian ruble plunged more than 11 percent against the dollar Tuesday in its steepest intraday fall since the Russian financial crisis in 1998 as confidence in the central bank evaporated after an ineffectual rate hike.

    The ruble opened around 10 percent stronger against the dollar after the central bank unexpectedly raised its benchmark interest rate by a hefty 650 basis points to try and halt the currency’s slide, but it reversed gains in volatile trade and repeatedly set new record lows.

    It has now fallen close to 20 percent this week, taking its losses this year against the dollar to more than 50 percent and stirring memories of the 1998 crisis when the currency collapsed within a matter of days, forcing Russia to default on its debt.

    Although Russia’s public finances and reserves are much healthier than in 1998, analysts say the country is on the brink of a full-blown currency crisis.

    At 10:10 a.m., the ruble was down around 11 percent against the dollar at 72.80 after earlier racing past 80 roubles per dollar for the first time to be down around 20 percent at one stage from the previous close.

    Against the euro, it was more than 13 percent weaker at 91.00.

    The ruble has been hammered by the slump in oil prices and Western sanctions imposed over Russia’s involvement in Ukraine, but its sharp decline over the past two days also reflects declining confidence in the central bank.

    The 650-basis-point rate hike, less than a week after another 100-basis-point rise, was seen as a sign of desperation by the bank, whose Governor Elvira Nabiullina now appears powerless to stop the currency’s slide, raising the risk of capital controls.

    Russian President Vladimir Putin has blamed both the slide in oil and the ruble on speculators and the West.

    The Russian Government has worked out measures to stabilize the currency market, Economy Minister Alexei Ulyukayev said Tuesday.

    The ruble strengthened sharply yesterday in volatile trade after the Finance Ministry said it had started selling foreign currency from its leftover stock.

    (SD-Agencies)