Russia’s central bank has more than doubled interest rates to 20% and refused to open the Moscow stock exchange as it sought to protect its economy from Ukraine-related sanctions that sent the value of the rouble plunging by a fifth. Amid growing queues at cash machines across Russia, the central bank tried to prevent the currency falling further by increasing the main rate from 9.5% to 20% and preventing trading. It went further by ordering domestic businesses to sell 80% of their dollar assets held abroad to circumvent a clampdown by the US and EU aimed at preventing the central bank from selling foreign holdings worth $640bn (£477bn) under its control to help the war effort. With the invasion of Ukraine by Kremlin forces entering its fifth day on Monday, the US Federal Reserve and the European Central Bank spearheaded plans to effectively ban assets sales by Russia’s central bank. Restrictions on trades using the Swift international trading system were agreed by the western powers over the weekend, in a move that targeted a range of commercial banks, including a ban on transactions by the central bank. The UK government said the package of sanctions would “devastate Russia’s economy”. The chancellor, Rishi Sunak, said they “demonstrate our steadfast resolve in imposing the highest costs on Russia and to cut her off from the international financial system so long as this conflict [with Ukraine] persists”. The US went further, saying it would place sanctions on Russia’s most prominent sovereign wealth fund, the RDIF, and its chief executive, Kirill Dmitriev, a key ally of Russia’s president, Vladimir Putin Without access to foreign buyers, the rouble was expected to crash further once markets inside Russia re-opened, analysts said. Russian bonds tumbled as investors braced for the possibility that the sanctions could push Moscow to default on its debt for the first time since 1998. The Institute of International Finance said it was “extremely likely” that Moscow would default on its foreign debts, although the relatively small $60bn size of the holdings would limit the fallout. Russia’s central bank initially delayed trading on Moscow’s stock exchange on Monday until at least 3pm local time, before saying it would stay closed all day. The rouble fell 30% to a record low against the dollar before the intervention, and later eased to stand 20% down. “External conditions for the Russian economy have drastically changed,” the central bank said, adding that the interest rate increase would “ensure a rise in deposit rates to levels needed to compensate for the increased depreciation and inflation risk”. The central bank governor, Elvira Nabiullina, said in a speech on Monday afternoon that Russia had a system that could replace the Swift international payments system internally, stressing the need to support clients of banks. She said all banks in Russia would fulfil their obligations and all funds on their accounts were secured. On Friday, rating agency S&P Global cut Russia’s debt rating to “junk” status, underlining the risk that the economic situation inside Russia could deteriorate rapidly. S&P also downgraded Ukraine’s credit rating, though it said aid promised by the US, UK, EU, Japan and the International Monetary Fund, should be enough to finance most needs this year, though it added that a prolonged war would change the financial situation dramatically. The Geneva-based Bank of International Settlements (BIS), an umbrella body for the world’s central banks, said it would act in concert with the US, UK and EU to isolate Russia’s central bank, adding: “The BIS will not be an avenue for sanctions to be circumvented.” The head of the BIS’s monetary and economic department, Claudio Borio, said the invasion of Ukraine, and the retribution for Russia, meant the global economy was now facing widespread uncertainty. Rising energy and commodity prices would further push up global inflation, he said, though it was unclear whether there would be unintended consequences from such far-reaching sanctions that have never been applied to a country so interconnected in the world economy as Russia. “It is hard to tell where markets will go from here,” Borio said. “The situation has clearly changed.” He added: “Central banks’ challenges have become more complex”– a reference to the fact many had been preparing to raise interest rates before the invasion. Neil Shearing, the group chief economist at Capital Economics, said: “The central bank of Russia has this morning raised interest rates to 20% but other measures (eg limits on deposit withdrawals) are possible … All of this will accelerate Russia’s economic downturn – a fall in GDP of 5% now looks likely. “Subsidiaries of some Russian banks overseas are likely to come under intense pressure (and may fail), but we judge that these are probably too small to create systemic risks.”