By Nicole Hong in New York, Andrey Ostroukh in Moscow and Chiara Albanese in London
Dec. 15, 2014 7:38 p.m. ET

A spiraling currency crisis, fueled by the bite of Western sanctions and the plummeting price of oil, spurred Russia’s central bank to raise interest rates late Monday, a drastic move aimed at shoring up the collapsing ruble.

The surprise action came at the end of a turbulent day for global financial markets. Currencies and stock markets from several developing nations were buffeted by the deepening oil-price slump and worries about future interest-rate increases in the U.S.

The epicenter of the troubles was Russia, where the ruble plunged to a record low in its biggest one-day decline since 1999.

The ruble’s fall, described by analysts as “staggering” and “extreme,” prompted Russia’s central bank to hike a key interest rate by 6.5 percentage points, to 17%, after New York’s trading day had ended. One dollar now buys more than 65 rubles, compared with 33 rubles at the start of the year.

Before Russia’s late move, U.S. stocks posted their fifth loss in six sessions, with the Dow industrials dropping 99.99 points, or 0.6%, to 17180.84. The selling was more intense in other markets, with Europe’s main index down 2.2%. Stock markets from Thailand to Mexico also dropped.

Analysts chalked up that bout of selling to growing anxiety about the impact on fragile developing economies of falling oil prices and the Federal Reserve’s looming policy shift. Many investors expect the Fed to signal at the end of its two-day meeting Wednesday that it is closer to raising interest rates than it has indicated in the past. That would deliver a hit to emerging markets that have benefited from years of easy-money policies by the U.S.

Russia’s central bank, which announced its decision after a late-night board meeting, said it increased rates because of devaluation and inflation threats. It also raised another key benchmark, known as the repurchase rate, to 18% from 11.5%. The moves risk pushing Russia closer to recession and are liable to be a blow to Russian consumers, who will face much higher rates to borrow the currency.Analysts chalked up that bout of selling to growing anxiety about the impact on fragile developing economies of falling oil prices and the Federal Reserve’s looming policy shift. Many investors expect the Fed to signal at the end of its two-day meeting Wednesday that it is closer to raising interest rates than it has indicated in the past. That would deliver a hit to emerging markets that have benefited from years of easy-money policies by the U.S.

Russia’s central bank, which announced its decision after a late-night board meeting, said it increased rates because of devaluation and inflation threats. It also raised another key benchmark, known as the repurchase rate, to 18% from 11.5%. The moves risk pushing Russia closer to recession and are liable to be a blow to Russian consumers, who will face much higher rates to borrow the currency.

Read More:http://www.wsj.com/articles/russia-moves-to-help-lift-sinking-ruble-1418690337

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