Strengthening of the ruble may harm the Kremlin. How?

On Friday, April 18, the exchange rate of the Russian ruble against the dollar and yuan reached its highest level since June 2023, DW reports citing data from the Moscow Exchange website.

Due to US sanctions, trading in dollars and euros on this platform has been halted since June 2024. However, the Moscow Exchange continues to publish indicative currency rates. According to this data, on April 18, the exchange rate for one US dollar was 82.02 rubles.

In 2025, the ruble sharply strengthened

At the end of November 2024, the Russian currency had depreciated to nearly 110 rubles per dollar. At the beginning of 2025, one dollar was equal to 101.6 rubles, and against the backdrop of sanctions imposed by the Biden administration on Russian oil, the rate reached the year's maximum of 103.4 rubles on January 15. However, after Donald Trump returned to the White House, the ruble began to stabilize. During this period, the ruble strengthened by 30% against the dollar.

At the beginning of the year, the yuan exchange rate was 13.94 rubles; by April 18, this indicator dropped to 11.16 rubles, or by 20%. The euro exchange rate also fell from 106.25 rubles at the start of the year to 93.25 rubles by April 18, a decline of 12.25%.

The current exchange rate of the dollar against the ruble is at its lowest since June 2023, and against the yuan since May 2023. The euro has also significantly depreciated against the ruble in February and March 2025.

Bloomberg: Ruble proved more profitable than gold

On April 15, Bloomberg reported that in the international over-the-counter market, the ruble has strengthened by 38% against the dollar since the beginning of 2025, becoming the world's fastest-growing currency. During this period, the price of gold increased by 23%.

According to Bloomberg, the strengthening of the ruble is supported by the policy of the Russian Central Bank, which maintains the key interest rate at 21%, positively influencing inflation. Additionally, unlike other emerging market currencies, the ruble is not experiencing capital outflow pressures due to global investors abandoning risky assets, as most have already left Russia.

The agency notes that the currency’s strengthening could negatively affect the Kremlin by reducing revenues from energy exports received in foreign currencies and increasing the domestic production costs of resources. Additionally, the volume of ruble expenditures for the war in Ukraine and social programs will also rise.

What factors influence the stabilization of the ruble exchange rate?

Geopolitical optimism. The start of negotiations between Russia and the US, along with contacts between American and Ukrainian officials aimed at resolving the conflict, encourage foreign investors to inject capital into the Russian stock market. Reports also surfaced about the US preparing plans to ease sanctions against Russia.

The latest report from the Russian Central Bank also cites positive expectations regarding reduced geopolitical tensions as one of the main factors behind the ruble's strengthening.

Increase in currency revenues. In February, the net revenue of Russia’s 29 largest exporters increased by 25% compared to January, reaching $12.4 billion. This has led to increased demand for ruble-denominated assets in the financial market.

Decrease in seasonal demand. Analysts from the Market Power project note that during the first quarter, currency demand remains low among both importers and the general population. This period also sees a decrease in the need for foreign currency to repay external debts compared to other times of the year.

Weakening of the dollar on the global market. In March, the US currency weakened not only against the ruble but also against other currencies. Global demand for the dollar has declined due to growing concerns about the prospects of the US economy. The primary cause of market uncertainty was Donald Trump’s tariff war. High tariffs imposed by the US president have increased the risk of recession in the American economy. Read 'Zamin' on Telegram!