Russian Ruble Hits 30-month High

The Russian ruble hovered around the 77 per USD mark, softening slightly from the near-three-year high of 75.5 from late February as increasing concerns to growth weighed against support from capital controls and the low influx of foreign currency to the Russian financial system. The Russian GDP expanded 1% in 2025, well below averages since the start of the invasion of Ukraine, prompting the Bank of Russia to unexpectedly extend its rate-cutting cycle. Still, mounting sanctions against the Russian central bank and key businesses prevented domestic market players from transact in hard currency, driving their fixes by the CBR to surge through the year. This was exemplified by the 96% plunge in ruble pair trading compared to before Russia's invasion of Ukraine. Additionally, the plunging energy revenues that are key for Russia's budget drove the CBR and Finance Ministry to sell gold and yuan in the National Welfare Fund to finance government operations, also supporting the currency.

The Russian Ruble touched 74.95 against the USD, the highest since May 2023. Over the past 4 weeks, US Dollar Russian Ruble lost 3.46%, and in the last 12 months, it decreased 24.6%.

The Russian ruble was near the 78 per USD mark in December, not too far from the near-three-year high of 76.5 from earlier in the month, amid low demand for hard currency and high interest rates by the Bank of Russia. Sanctions against the Russian central bank and key businesses prevented domestic market players from transacting in hard currency, driving the dollar fixes by the CBR to plunge through the year. This was exemplified by the 96% plunge in ruble pair trading compared to before Russia's invasion of Ukraine, while data from the CBR indicated that nearly 60% of Russian exports were paid in rubles, compared to 14% in 2021. The latest sanction measures included sanctions against Lukoil and Rosneft, the country's largest oil companies, while the EU confirmed it will phase out Russian LNG by 2027. Meanwhile, the CBR cut its key rate by 50bps to 16.5% this month and hinted that increasing inflation expectations limit the room for more accommodative financial conditions.