Why the Ruble is Strengthening While Searches for "Dollar Depreciation" Reach Record Highs: Macroeconomic Reasons, the Impact of the Central Bank of Russia’s Policies, and What This Means for Investors in 2025.
Unexpected Strength of the Ruble at Year-End
As we approach the end of 2025, the Russian ruble exhibits unexpected strength. The exchange rates for major foreign currencies have significantly dropped: the US dollar has fallen to approximately 75–77 rubles, and the euro to 90 rubles, marking the lowest values seen in the last two and a half years. This rapid appreciation of the ruble has garnered widespread attention; data from Google indicates that the number of searches for “dollar depreciation” has surged to a historical high for the quarter. Typically, by December, the ruble weakens its position due to increased imports in anticipation of the holiday season and government spending; however, the current situation breaks this stereotype. Investors and the general public are concerned and are trying to understand the reasons behind the strengthening of the national currency and whether they should rush to currency exchange offices to buy dollars.
Trade Surplus and Import Restrictions
One of the fundamental reasons for the ruble’s appreciation is Russia’s significant positive trade balance. Exports far exceed imports, ensuring a steady influx of foreign currency into the country:
- High Export Revenues. Thanks to the export of energy resources and other goods, Russia continues to receive a substantial volume of revenue in foreign currency. Even considering sanctions and falling oil prices, export volumes remain considerable. Furthermore, non-oil and gas exports have recently been on the rise, further increasing currency influx.
- Decline in Imports. Imports into the RF remain relatively low. Sanctions and government measures – such as increased recycling fees and other restrictions – have curtailed the import of foreign goods (cars, technology, etc.). The strategy of import substitution creates additional barriers for foreign products. Moreover, domestic demand has weakened: economic growth has slowed, real incomes are rising modestly, and an increase in VAT is on the horizon, all of which limit purchasing power and the need for imported goods. As a result, demand from importers for foreign currency remains low.
- De-dollarization of Transactions. The share of transactions conducted in national currencies has increased. Russia and its trading partners are increasingly switching to rubles, yuan, and other "alternative" currencies in foreign trade. Many deals for exported goods are now concluded without involving dollars or euros. This reduces the direct demand for reserve currencies in the domestic market. Simultaneously, the country has become less reliant on fluctuations in oil prices due to the budget rule mechanism.
- Cryptocurrency as "Hidden Export." A new factor has emerged: a portion of international transactions is now being conducted through cryptocurrencies. Officials estimate that significant amounts for imported supplies may be paid in cryptocurrency. This essentially means that Russian exporters, for example, of energy resources, receive not goods or dollars in return, but digital assets that can subsequently be converted. This hidden export brings in additional currency revenue and reduces the need for official dollars for import payments. All these factors contribute to the ruble’s strengthening.
Monetary Policy and Financial Factors
Another group of reasons is linked to the financial system and the policies of regulators. Tight monetary conditions within the country significantly bolster the ruble:
- High Interest Rates of the Central Bank of Russia. The key rate of the Bank of Russia is at a double-digit level (around 17% per annum). Such high rates make ruble-denominated instruments extremely attractive for investors and depositors. Banks offer interest rates of 15–20% per annum on deposits, and reliable bonds provide high coupons – all of this encourages saving in rubles rather than foreign currencies. Both individuals and businesses are less inclined to buy dollars or euros, which do not yield income when there is the opportunity for substantial returns in rubles.
- Influx of Rubles from Exporters. Exporters receiving revenue in foreign currency sell a significant portion in the domestic market. This is partly a requirement of legislation and partly a rational decision: to convert dollars into rubles to invest them at high-interest rates or finance domestic expenses. In the context of high rates, even exporters are keen to quickly exchange currency for rubles and earn interest, rather than hold funds in depreciating dollars.
- Reduced Capital Flight. The Russian financial market has become more "closed." After 2022, the external debt of the country and corporations has significantly decreased, and access to external capital markets has been curtailed. Foreign investors have mostly exited the Russian market. This has reduced the demand for foreign currency needed to service external debts or withdraw funds abroad. Strict capital movement restrictions (though these have recently been eased for individuals) also play a role: rubles mostly remain within the country. The exchange rate is now primarily determined by the balance of exporters and importers, without the previous pressure from financial speculators or panic-minded citizens.
- Currency Interventions under the Budget Rule. An additional factor has been the Ministry of Finance and the Central Bank's policies in the currency market. In recent months, the government has actively sold foreign currency from the National Wealth Fund via the mechanism of "mirror" operations of the budget rule. Since December 5, the volume of currency sales has sharply increased – according to the Ministry of Finance, to an equivalent of approximately 14.5 billion rubles per day, about 1.5 times higher than in the autumn. Essentially, the regulator is daily injecting a significant portion of dollars and euros into the market in exchange for rubles. This creates excess currency supply and prevents the dollar's rate from rising, thereby supporting the strength of the ruble.
- Weakness of the Dollar in the Global Market. The strengthening of the ruble does not occur in a vacuum; external conditions are also favorable. The US dollar has weakened globally at the end of 2025: investors expect an imminent reduction in the Federal Reserve’s rates and a loosening of monetary policy. The DXY index (the dollar's exchange rate against major world currencies) has dropped to the lowest levels seen in recent years. The dollar is depreciating against many currencies, and the ruble is no exception. Additionally, the anticipated shift in control of the US government towards an administration favoring a weaker dollar (as analysts believe the new financial authorities may pursue) also weighs on the US currency. Thus, external factors are also benefitting the ruble.
- Geopolitical Expectations. Finally, market sentiment is influenced by geopolitics. By the end of the year, cautious hopes for a reduction in international tension have emerged – partly due to diplomatic signals. While there are no concrete peace agreements yet, some market participants have priced in expectations for a more favorable future scenario. This has reduced the panic demand for currency “for a rainy day” among individuals and businesses. Any positive news (such as an expansion of cooperation with major partners like India or hints at possible negotiations to resolve the conflict) supports the ruble. Nevertheless, experts emphasize that the geopolitical factor is more psychological – it may have accelerated the current strengthening, but it cannot maintain the ruble's strength long-term without support from other fundamental reasons.
Pros and Cons of a Strong Ruble for the Economy
Such a sharp strengthening of the national currency has a dual effect on the economy – there are both winners and losers from a strong ruble.
- Benefits for Citizens and Importers: The strengthening of the ruble curtails inflation. Prices for imported goods (electronics, cars, clothing, fruits, etc.) either stop rising or decrease in ruble terms. This supports the real purchasing power of the population and lowers costs for companies importing raw materials and components. Traveling abroad and paying for services in foreign currency (tourism, education, foreign services) become cheaper for Russians. Overall, a strong ruble increases trust in the national currency and financial stability – savings in rubles depreciate more slowly, positively impacting domestic consumption.
- Drawbacks for the Budget and Exporters: The Russian economy is historically export-oriented, and therefore an overly strong ruble adversely affects exporters. Companies selling their goods abroad for dollars or euros (oil and gas, metallurgy, chemicals, etc.) receive less rubles when converting revenues. Their profitability falls, which can lead to cutbacks in investments, costs for development, and even reductions in extraction/production volumes. The state budget misses out on ruble revenue from export duties and taxes: oil and gas revenues in rubles have sharply declined as the ruble has strengthened, exacerbating the budget deficit. Ultimately, an overly strong ruble poses a challenge for economic growth: export-oriented sectors that drive the economy are losing profitability. If this situation persists, it could have negative consequences for employment in those sectors and for treasury inflows. The government effectively has to balance the goal of curbing inflation (where a strong ruble helps) with supporting export-oriented sectors (which need a weaker ruble to operate comfortably).
How Authorities Are Responding to the Strengthening Ruble
The unusual currency dynamics have caught the attention of the country's leadership. Russian authorities openly acknowledge that an excessively strong ruble creates challenges. The head of the Ministry of Economic Development, Maxim Reshetnikov, described the current strengthening of the ruble – almost a quarter since the beginning of the year – as one of the main challenges for the economy and stated that “a strong ruble is a new reality that must be taken into account.” A discussion is underway in business circles and the government regarding whether a currency corridor or other measures are needed to weaken the ruble; however, the Ministry of Finance has opposed direct management of the exchange rate. Finance Minister Anton Siluanov stated that the floating rate in the current conditions reflects the balance of supply and demand and is roughly aligned with payment balance parameters. In simpler terms, the authorities do not plan to artificially return to a fixed exchange rate – the economy is invited to adapt to the strong ruble.
Nevertheless, indirect measures to regulate the situation are being undertaken. As previously noted, since December, the Ministry of Finance has increased the sale of currencies from reserves, trying to smooth out exchange rate fluctuations and partially compensate for the seasonal rise in demand for foreign currency at year-end. Simultaneously, the Central Bank has begun to gradually ease the previously imposed currency restrictions. As of December 8, the regulator removed the remaining limits on foreign currency transfers abroad for Russian citizens and "friendly" non-residents. Earlier, individuals could send no more than $1 million abroad per month – now this restriction has been lifted. The Central Bank explained the decision with the stability of the currency market. Some experts believe that the removal of limits is a step towards a more market-oriented formation of the exchange rate: it increases the flexibility of transactions, reduces the incentive to use grey capital outflow schemes, and most importantly, allows for some “pressure” to be released from the overheated currency market, slightly increasing currency outflow.
Moreover, discussions are underway to stimulate imports. M. Oreshkin, the economic aide to the president, noted that for a return to a weaker ruble in the future, the government may need to pursue an aggressive import-boosting policy in specific segments – that is, consciously increasing demand for foreign currency. For now, however, official statements convey confidence that the situation is under control. Regulators indicate that they have sufficient tools to prevent excessive strengthening or sharp volatility in the ruble if necessary. Overall, the policy aims to smooth out extreme exchange rate fluctuations without interfering with market trends: a strong ruble is leveraged as an ally in the fight against inflation, but authorities strive to prevent a scenario where the exchange rate becomes “too good to be true” and harms the budget.
Outlook: Will the Ruble Remain Strong for Long?
The main question for investors and businesses is whether the current exchange rate around 75–80 rubles per dollar will persist for an extended period. The consensus among most analysts is that in the short term, until the end of the year, the ruble will remain relatively strong in the absence of external shocks. This is supported by all the factors mentioned – from export revenues to Central Bank policies. Many investment companies have adjusted their forecasts and now expect to close the year with an exchange rate in the range of 75–78 ₽ per $ and 90 ± 5 ₽ per €. It is possible that just before the New Year celebrations, the ruble may slightly weaken due to the seasonal rise in consumer and corporate spending (including on imported goods) and funds being sent abroad, but no significant deviations are anticipated. The regulator will continue to sell currency to temper increasing demand, so sharp fluctuations in the exchange rate are unlikely.
In 2026, experts expect a gradual weakening of the ruble. Maintaining the national currency at such a strong level is difficult and disadvantageous for the economy itself. The baseline scenario from major banks and analytical centers anticipates a return of the dollar to the level of 85–95 rubles over the course of the year. Some projections for the end of 2026 suggest a range of about 90–100 rubles per dollar. The reasons include changes in the very factors currently supporting the ruble. Firstly, a softening of monetary policy is anticipated: if inflation in the Russian Federation continues to slow, the Bank of Russia may begin to gradually lower the key rate. Predictions suggest that as early as the first half of 2026, the rate could drop from its current highs (17%) to 14–15%. The reduced cost of ruble-denominated loans and declining deposit rates will decrease the attractiveness of the ruble for speculative operations, thereby increasing the willingness of businesses and individuals to buy foreign currency.
Secondly, the scale of currency interventions will diminish. The Ministry of Finance does not plan to sell foreign currency indefinitely: the volumes of sales under the budget rule in the new year are likely to decrease, especially if oil prices rebound slightly. This will remove part of the support that the ruble is currently receiving from the government. Thirdly, import levels may rise. The economy cannot long meet all demand solely through domestic production – sooner or later, companies will begin to import more equipment, components, and goods from abroad, especially as they adapt to sanctions. Additionally, the increase in VAT starting January 1, 2026, may prompt businesses to purchase imported goods in advance, thereby boosting demand for foreign currency. Moreover, the population traditionally spends more during the winter holidays, including travel abroad, which temporarily raises demand for dollars and euros.
Finally, geopolitical factors must not be overlooked. In the event of a thawing of relations, such as a hypothetical peace agreement followed by a partial easing of sanctions, the ruble could receive another boost to strengthen. Some optimistic forecasts suggest that under favorable circumstances, the exchange rate in the first quarter of 2026 could briefly return to 70–75 ₽ per $. However, even the authors of such scenarios caution that this would be a one-time, emotional strengthening: in the long term, fundamental economic factors will prevail, and an excessively strong ruble will recede regardless. Conversely, if the geopolitical situation remains tense or worsens – new sanctions, risks to exports – this will accelerate the ruble's weakening.
Overall, the consensus is clear: the current ultra-strong ruble is a phenomenon supported by a unique combination of factors, and it is unlikely to persist unchanged throughout the coming year. Most likely, the ruble's exchange rate will gradually shift to a more "comfortable" range for the economy. Experts do not anticipate a drastic collapse of the national currency – barring any unforeseen circumstances, the ruble's weakening will likely be smooth. In other words, a dollar at 100 rubles may return, but not as a sudden jump tomorrow; rather, it would result from a gradual process over the course of 2026. At the same time, a return to extremely low values (50–60 ₽ per $, as seen a few years ago) is also not foreseen – too much has changed in the economy. Rather, we are looking at a period of relative stability for the ruble this winter and moderate depreciation approaching spring-summer 2026.
Should You Buy Dollars Now: Recommendations for Investors
The key practical question on many minds is whether one should rush to buy dollars (or euros) now, taking advantage of their “low” price? The answer depends on your objectives, but panic buying of foreign currency at this time is likely unjustified. Here are several considerations for private investors and savers:
- Don't view currency as a quick profit-making tool. In recent months, the ruble has strengthened, and those who bought dollars at previous peaks have incurred losses. For example, purchasing $1,000 at the end of 2024 would have cost more than 100 thousand rubles, whereas today those dollars are worth approximately 75–80 thousand. This represents a loss of around 25%. Additionally, during this time, the opportunity cost of investing the same money into a high-interest ruble deposit has been lost. Thus, savings in currency underperform against ruble-denominated instruments when the ruble is rising. There are no guarantees that the situation will turn sharply in the coming weeks. Therefore, buying dollars "in hope of an increase in the exchange rate" today seems speculative and risky.
- Ruble assets currently offer high returns. With high deposit and bond rates, you can achieve double-digit yields in rubles. These returns already offset any potential weakening of the ruble in the future by several percentage points. Simply put, even if in a year, the dollar rises from 75 to 90 rubles (+20%), a deposit yielding 20% per annum would yield comparable profits, offsetting the currency's growth. And if the exchange rate remains closer to current levels, the advantages of ruble instruments will be evident. Considering this, most financial advisors currently do not recommend keeping all savings in foreign currency – ruble instruments have become too attractive.
- Buying foreign currency makes sense for specific goals. If you have expenses planned in dollars or euros – such as trips abroad, paying for education, or purchasing imported goods – the current exchange rate is indeed favorable for conversion. Currencies have depreciated, allowing for savings. In such situations, it is wise to buy the necessary amount gradually, in portions, to reduce currency fluctuation risks. For example, if a trip is planned in a couple of months, purchasing foreign currency bit by bit each week would yield a comfortable average purchase rate.
- Dollars as a "safety cushion" – only within the scope of diversification. It’s always prudent to keep some portion of savings in different assets. If you are concerned about the long-term stability of the ruble, there’s nothing stopping you from acquiring a certain portion of currency "for safety." However, approach this without frenzy: allocate a reasonable share – one that you’re prepared to lose in exchange for insurance against the worst-case scenario. In the meantime, do not rush to sell all ruble investments. The optimal strategy is to diversify your capital: for instance, part in rubles in deposits/OFZs, part in foreign currency either as cash or in an account, and part in other assets (precious metals, stocks, etc.). Such diversification will instill confidence regardless of any market developments.
- If you already hold currency in your portfolio. Many Russians have their savings partially in dollars or euros from previous times. Now that dollars have depreciated, the question arises – what to do with them? Financial experts advise against keeping all your eggs in one basket. It makes sense to take advantage of the strong ruble and rebalance your portfolio: for example, convert a portion of your foreign currency savings back into rubles and invest them at a high interest rate. This will increase the overall yield of your capital. The remaining portion of the currency can stay as long-term insurance. Over time, you can gradually adjust the proportions based on market conditions.
Conclusion: The current situation in the currency market calls for calm and considered actions rather than haste. The ruble is strong now for objective reasons. Rushing to change all ruble savings into dollars for fear of "missing the moment" is unnecessary – there’s a significant risk of incurring losses or missing out on gains later. On the other hand, completely forsaking foreign currency is also inadvisable: it remains a protective asset against unforeseen shocks. The optimal strategy for a broad range of investors is to coolly assess their needs and horizons. Leverage the strong ruble to maximize benefits (high rates, cheap imports), while adhering to the principle of diversification, keeping a moderate portion of savings in reliable foreign currency. This approach will help you feel secure regardless of the ruble's exchange rate.
