FXStreet (Guatemala) - Russia’s Central Bank have taken emergency precautionary steps to protect against a further collapse in their currency in hiking interest rates by the most since the nations 1998 default, a move that some analysts say could cripple the economy.

The Central Bank has increased the key rate from 10.5% to 17%. The Ruble depreciated by nearly 10% in overnight trade against the US dollar, moving through 60 for the first time on record and marked a high above 66.50 before settling back to 60.00

The drop in the value of the Ruble is directly linked to the price of oil as Russia’s economy derives about 50% of its budget revenue from natural gas and oil taxes with 25% of the nations GDP is directly linked to the energy industry. The price of oil continues to fall marking new lows. Brent crude made a low of $60.38 in European trade and WTI $55.01 was the low in the US. As the Ruble fell on Monday, the Central Bank said the economy could shrink by as much as 4.5& next year if oil averages at just $60/bbl.