Protesters hold placards during a picket in central Moscow, December 12, 2014. According to local media, the people, who took mortgages in foreign currencies, now face larger risks due to the weakening of the rouble. The placards read,
Protesters hold placards during a picket in central Moscow, December 12, 2014Reuters

Russian stock and foreign exchange markets have tumbled in today's trading despite the central bank implementing an emergency interest rate hike to 17% to stop the rouble going into freefall.

The dollar-denominated RTS share index tanked by more than 11% - or by 638 points - while the Micex Composite Index fell by over 7%, or 103.44 points.

Meanwhile the rouble suffered heavy losses against the US dollar and the Euro.

For the first time the currency sunk below 66.00 roubles per US dollar. It hit 64.30 roubles per dollar, despite initially opening up 9% stronger.

Russia bank borrowing rates are also now equivalent to those of developing market Rwanda, after the benchmark international dollar bond yield climbed to 6.75%.

Russia hiked its interest rates by 650 basis points to 12% on 15 December in a bid to stop the currency tumbling further.

The new 17% rate is effective 16 December. The hike is the highest since the 1998 default, and the sixth this year. Russia's central bank spent more than $80bn of its reserves to stop the free fall in the rouble.

The rouble is more than 50% down against the dollar from 2013, thanks in part to US and Europe imposing sanctions on Russia, following its annexation of Ukraine's Crimea region.

That period has also coincided with a dramatic fall in the price of crude oil: Russia's government relies on export revenues from oil and gas to fund around half of its annual budget.

Russian central bank governor Elvira Nabiullina told Rossiya-24 television that the "rouble weakness is driven by external factors such as the oil price and sanctions". She said the overnight decision to raise rates was to offset these negative factors.