The ruble plummeted to a new low of 48.7 rubles a dollar on Friday before bouncing back on reports that the bank was holding an emergency board meeting. After the bank issued its statement, the currency stabilized at around 46.4 rubles a dollar.
Russia's currency has lost about 40 per cent of its value since the start of the year amid the financial uncertainty created by Western sanctions over the crisis in Ukraine, and, more recently, a plunge in the price of its oil and gas exports.
As the ruble weakened, the Russian central bank intervened in markets to support it. But that has become increasingly costly — $30 billion last month alone.
As a result, the central bank this week decided to dial back its support for the currency, announcing it would limit interventions to a maximum of $350 million a day. The move was meant as a step toward fully floating currency.
But the ruble quickly fell again, hitting new record lows this week until the central bank's meeting Friday. The bank was reassured investors that it would increase its interventions in the markets to support the ruble from abrupt plunges.
Experts warn the ruble's sharp devaluation has created major risks for the country's financial stability as it is certain to cause a hike in inflation. The Russian economy badly depends on a wide range of imports — from food to capital goods — and the ruble's plunge would quickly make consumer prices soar.
Some observers warn it may also create risks for the nation's political stability by fueling social discontent.