Russia’s central bank has hiked interest rates to 12pc in an attempt to defend the plunging rouble.

The increase from 8.5pc to 12pc was announced after an emergency meeting, in a move the central bank said was designed to help “limit price stability risks” and cool inflationary pressures.

It is the second increase in just three weeks and the biggest since the war started in Ukraine when Russia hiked rates to 20pc to support the rouble.

It comes after the rouble fell to a 16-month low on Monday, slipping below 100 to the US dollar despite the Kremlin’s efforts to prop up its currency.

The central bank warned the weaker currency – which makes imports more expensive – was “gaining momentum and inflation expectations are on the rise.”

The rouble fell by 2pc after Tuesday’s announcement, weakening to 98.5 against the dollar.