Russia's central bank raised all its interest rates, including the key rate, by 150 basis points in what it described as a temporary move to "prevent the risk for inflation and financial stability arising from the recent increase in financial market volatility."
The Bank of Russia said the new rates would take effect from March 3, at 11 a.m. Moscow time.
The central bank's key rate, the rate on 1-week repurchase auctions and 1-week liquidity absorption, was raised by 150 basis points to 7.0 percent while the overnight liquidity provision rate was raised to 8.0 percent from 6.50 percent. The one-day deposit rate was raised to 6.0 percent from 4.50 percent.
Russia's financial markets were hit sharply when they opened on Monday morning as investors were unnerved by the prospect of war between Russia and Ukraine.
Russia's stock market RTSI Index ended the day 12 percent lower and the ruble fell 2.3 percent from Friday to a low of 36.92 to the U.S. dollar despite the Russian central bank spending a reported $10 billion of its reserves to support the currency.
The ruble has been depreciating since February 2013 and lost 7.7 percent against the dollar in 2013. It has continued to fall this year and is down almost 11 percent so far.