Russia raised interest rates to 12% after the ruble fell at the lowest price of the last 16 months.

The ruble to US dollar exchange rate hit 1 to 100 on Monday, prompting Russia’s central bank to hold an emergency meeting.

The Bank of Russia announced that it has decided to raise interest rates from 8.5% to curb inflation, which reached 4.4% in August.

Pressure on the Russian economy is mounting due to imports growing faster than exports and military spending rising on the Ukraine war.

“Sustained growth in domestic demand outpacing the capacity to expand production is strengthening underlying inflationary pressure and has an impact on the dynamics of the ruble exchange rate through increased demand for imports,” the Bank of Russia said in a statement.

The bank said “inflationary pressures” were rising but that its target was to reduce inflation to 4% by 2024.

Russia has been the target of sanctions from Western countries since its invasion of Ukraine in February 2022.

Its currency, the ruble, plummeted after the war broke out, but has been boosted by capital controls and oil and gas exports.

However, it has lost about a quarter of its total value against the dollar since the invasion of Ukraine, and this week it took more than 100 rubles to buy a