In a geopolitically tense context and with low oil prices, the Russian ruble has surprised international markets, becoming, according to Bank of America, the best-performing currency in the world in 2025.
The over 40% surge comes after two years of significant depreciation and positions the ruble unexpectedly strong, according to CNBC.
What's Behind the Ruble's Comeback
Despite appearances, the rise of the ruble is not based on foreign investor confidence but on tough domestic measures. The restrictive monetary policy, strict capital controls, and a weaker dollar have decisively contributed, analysts explain.
Brendan McKenna, economist at Wells Fargo, identifies three key factors: high interest rates, currency restrictions, and slight progress in peace talks with Ukraine.
The Central Bank of Russia has maintained a 20% policy interest rate to limit inflation and reduce demand for foreign currency. This strategy discourages imports and supports the ruble exchange rate.
Andrei Melaschenko, economist at Renaissance Capital, emphasizes that the overstock of electronics and cars at the end of last year anticipated an increase in customs duties.
Russian exporters are required to convert a portion of their earnings into rubles, which supports domestic demand for the national currency.
Currency sales reached $42.5 billion between January and April, a 6% increase compared to the same period last year. At the same time, the Central Bank has tightened the money supply: the money stock transitioned from an annual growth of 23.9% in August 2023 to a contraction of 1.19% in January.
The Trump Effect and the Illusion of Peace
Another source of optimism is the hope for a peace agreement, fueled by Donald Trump's victory in the US elections.
This perspective has positively influenced the ruble exchange rate, but analysts warn that the trend could be temporary.
If peace negotiations progress, Russia may relax currency controls and reduce interest rates, which could rapidly weaken the currency.
The Costs of a Strong Currency
A strong ruble is not without consequences. The decline in oil prices affects exporters' profit margins, and the federal budget, dependent to the extent of 30% on revenues from oil and gas, is under pressure.
The Ministry of Finance has already tapped into the National Welfare Fund to cover the deficit, and in the absence of a price recovery, budget cuts in non-strategic areas could follow.
Even if the ruble were to depreciate, this would not necessarily offer a competitive advantage to Russia, given that the economy remains largely isolated from international markets. Therefore, the efficiency of a weak currency is reduced, McKenna emphasizes.