Ruble’s remarkable rally signals shift in Russia’s wartime economy |
The Russian ruble has staged a striking comeback in 2025, outperforming every other major global currency and marking its strongest annual gains since 1994. According to Bloomberg calculations, the ruble has appreciated roughly 45 percent since the beginning of the year, trading near 78 to the US dollar and approaching levels not seen since before the escalation of the Ukraine conflict in early 2022. At a time when Russia remains under sweeping Western sanctions and largely cut off from global financial markets, the currency’s surge has drawn attention from economists, investors, and policymakers alike.
Beyond foreign exchange markets, the ruble’s performance places it among the world’s top five most profitable major assets this year in terms of spot returns. Only precious metals-platinum, silver, palladium, and gold-have delivered stronger gains. This unexpected resilience challenges widely held assumptions that prolonged sanctions and geopolitical isolation would inevitably weaken Russia’s currency and destabilize its financial system.
One of the key drivers behind the ruble’s strength has been a sharp decline in domestic demand for foreign currency. Western sanctions have severely limited Russia’s access to imports, cross-border capital flows, and international financial infrastructure. While these measures were designed to pressure Moscow economically, they have also reduced opportunities for Russian businesses and individuals to convert rubles into dollars or euros.
With fewer channels to move money abroad and fewer imported goods to purchase, demand for foreign currencies has fallen. As a result, the ruble has benefited from an artificial scarcity dynamic, where lower demand for dollars and euros supports the domestic currency despite Russia’s constrained trade environment.
This dynamic underscores one of the paradoxes of........