(Bloomberg) -- Kazakhstan, the biggest oil producer in central Asia, raised its benchmark interest rate by 2.75 percentage points to 12% Tuesday at an emergency meeting and started selling foreign currency to help support the tenge.

The National Bank of Kazakhstan raised the base rate from 9.25% to protect the tenge from increased external risks, support price stability and hold down the use of the U.S. dollar in the economy, Governor Yerbolat Dossayev told a cabinet meeting.

The central bank sold $318.5 million at an auction that set the sales price to maximize bids. The currency was sold at 393.5 tenge per dollar, the central bank said in a statement. The tenge had weakened 2.9% to 394 in Almaty before that announcement, according to Kazakhstan Stock Exchange data.

Kazakhstan sets its budget using an oil price of $55 per barrel, and the tenge closely tracks the currency of Russia, its largest trading partner. The ruble plunged 8.5% in offshore trading Monday as oil dropped after Saudi Arabia and Russia positioned themselves for a price war following the collapse of an agreement on oil production curbs.

Kazakhstan also banned purchases of foreign currency by state-run companies from Tuesday except for buyers that need to meet current obligations, Deputy Finance Minister Berik Sholpankulov said. On Monday, President Kassym-Zhomart Tokayev ordered the government to set up an emergency reaction center to stabilize the economy.

The central bank also widened its rates corridor, formed from the overnight deposit and lending rates, to 1.5 percentage points around the benchmark, from 1 percentage point.

The National Bank is ready to take additional measures to provide stability in the Kazakh financial market, Dossayev said.

--With assistance from Naubet Bisenov.

To contact the reporter on this story: Nariman Gizitdinov in Almaty at ngizitdinov@bloomberg.net

To contact the editor responsible for this story: Torrey Clark at tclark8@bloomberg.net

©2020 Bloomberg L.P.