The Russian central bank has tripled interest rates to 150% to control an economic crisis that threatens the rouble.

The central bank announced the rate rise saying it "wanted to pour some cold water on market players." The bank's first Deputy Chairman, Sergei Aleksashenko, said he expected the actions to have an impact on the market on Thursday, when regular securities trading resumes.

All over Russia people are queueing at exchange booths to convert their roubles into dollars

During the past two weeks, Russia's central bank has already had to raise interest rates twice, first to 30% and then to 50%. They are now at their highest level since February 1996, when the country was suffering from high inflation.

The government has backed the bank's action. At a news conference, Prime Minister Sergei Kiriyenko, said the government was not considering a devaluation of the rouble.

Shortly before the new rates were made public, President Boris Yeltsin announced an emergency meeting on Thursday with the prime minister, the finance minister and the central bank chief.

'Panic' on the markets

Martin Diggle, director of Brunswick brokerage in Moscow, described the market situation as "blind panic, especially among Russians." He said many were selling roubles "at any price they can get ... it's irrational."

Bad news for investors at Russia's stock exchange

Share prices were hit hard too - the RTS index of Moscow's Stock Exchange lost 10.55%.

The crisis is escalating despite a harsh austerity programme announced by President Yeltsin on Tuesday, to cut 40bn roubles ($6.5bn) of government spending.

The basic problem is the government's shortage of ready cash. The central bank has raised interests rate in order to attract money for government bonds, but investors are extremely nervous, selling roubles and driving the currency's value further down.

So far the Russian central bank has spent $500m defending the rouble, but has few reserves left to go on doing this.

IMF says Russia 'not in crisis'

Meanwhile, the International Monetary Fund, one of Russia's major creditors, has tried to calm the markets as well. The IMF's Managing Director, Michel Camdessus, who is currently in Russia, said the country's markets were not in crisis - "contrary to what markets and commentators are imagining."

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