Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
On October 10, 2023, a Russian ruble coin with a dollar bill and a quarterly coin in Moscow.
Alexander Nemenov AFP | Gets the image
In the midst of a long war, oil prices, fierce sanctions and economics on the descent, Russia are declining rub increases.
In fact, this is the most effective currency in the world so far, Bank of America reports, more than 40%. The stunning rally of rubles in 2025 notes a sharp turn from the last two years, when the currency has been sharply depreciated.
What nourishes the Russian currency?
The force in the roofer is less relevant to the sudden jump of foreign investors’ confidence than with capital control and pulling on politics, Watchers CNBC said. Weakness in the dollar comes as an additional bonus.
Brandan McCanna, an international economist and currency strategist at Wells Fargo, lists three reasons for the ruble. “The Central Bank has decided to maintain relatively elevated rates, capital control, and other FX restrictions have been slightly intensified, and (there was) some progress or an attempt to progress in the search for peace between Russia and Ukraine.”
The Central Bank of Russia has supported a restrictive position to reduce high inflationKeeping internal interest rates by 21% and strengthening the loan. Steep costs on borrowing holding back local business Observers said from the import of goods, in turn, reducing the demand for foreign currency among Russian enterprises and consumers.
There was a decrease in demand in foreign currency by local importers, given poor consumption and sufficient rubles, said Andrei Melashenko, economist of the Renaissance capital. This decline gave the ruble a push, because banks do not need to sell rubles to buy a dollar or yuan.
Russian exporters should be paid in the handles, or at least transform the payment in dollars into rubles, thereby increasing demand. On the other hand, importers stopped buying foreign goods, and therefore it is not necessary to sell rubles to pay for dollars.
In the first quarter of 2025, it was “overcoming” in consumer electronics, cars and trucks, which actively imported in the second half of last year in anticipation of an increase in import duty, said the Moscow economist. Consumers’ preservation was primarily in the sector of durable goods that A considerable part of Russia’s imports was createdsaid Melashanka.
Another key reason that the Russian ruble has strengthened this year is that Russian exporters, in particular the oil industry, transform foreign profits back into rubles, analysts said. The Russian government requires large exporters to return part of its foreign salary to the country and exchange them for rubles in the local market, the government reports.
Between January to April Sales of foreign currency The largest exporters in Russia amounted to $ 42.5 billion, according to CBR. This is almost 6% jump compared to four months to January.
The CBR, which reduces the monetary mass, also supports rubles, said Steve Hanke, Professor of the Applied Economy at John Hopkins University.
In August 2023, the growth rate created by CBR rose by 23.9% a year, he said. This figure has become negative since January -1.19%, Hanke said.
In addition, the hopes for a peaceful cause between Ukraine and Russia after the US presidential election, Donald Trump, also caused some optimism, McKen Wales Farga said. The expectations of Russian reintegration to the economy caused some capital flows back to assets intended for rubles, despite the control of capital, which to some extent supported the strength of the currency.
Is the action sustainable?
Despite the current ruble strength, analysts warn that this may not be stable. Oil prices – the main pole of Russia’s export economy – have declined significantly this year, which can weigh the FX influx.
“We believe that the ruble is close to the maximum and can start to weaken soon,” Melashanka said. “Oil prices have declined significantly, which should be reflected in reducing the income from exports and sale of its foreign currency component,” he added.
While peace talks between Russia and Ukraine recently did not have concrete events, McKenna also noted that a specific peaceful deal could destroy the ruble force, since such controls such as FX restrictions that supported the currency.
“The ruble can sell quite quickly to go forward, especially if peace or ceasefire reached,” he said.
“In this scenario, capital control is probably fully rising, and the Central Bank can reduce the rates quite quickly,” he added.
Economic compromises
Exporters also see that industry analysts note that, in particular, the country’s oil sector amid a decrease in world oil prices. The government also feels squeezing – a decrease in oil prices combined with a stronger ruble is blurring oil and gas revenue.
The Finance of the Government is Highly sensitive to hesitation in raw pricesOil and gas profits are about 30% of federal revenues in 2024, according to Heli Simola, Senior Economist of the Bank of Finland.
“The Ministry of Finance was forced to rely more strongly on the National Welfare Fund to cover the costs,” Melashanka said. “And there may be additional priority costs if this trend continues.”
Given this, in addition to the oil trade, Russia was mainly isolated from the world market. “So, the weaker ruble does not add much competitiveness of Russia,” McKenna said.
