The ruble has been surging since Trump returned to office. That could be bad news for Russia’s state budget.
Since the start of 2025, the dollar has dropped nearly 18 percent against the ruble on the over-the-counter market, while the euro has fallen by 11.5 percent and the yuan by 15.3 percent. The ruble’s value has now risen for three months in a row, making it one of the world’s fastest-growing currencies. But how long this rally will last is unclear — and the exchange rate is approaching a point where it could hurt Russia’s budget and exporters. At the same time, the factors that have helped boost the ruble so far this year are starting to lose steam: peace talks over the war in Ukraine appear stalled, oil prices are falling, and the effect of Russian exporters bringing foreign earnings back is slowing down. Meduza takes a look at how the ruble’s rise could actually cause problems for Moscow.
Why has the ruble risen so much in 2025?
Part of the answer lies with Donald Trump. Since his victory in the 2024 U.S. presidential election, Russian markets have experienced a wave of cautious optimism. Investors began anticipating a thaw in relations with the West, a partial lifting of sanctions, and an end to the hot phase of the war in Ukraine — one of the main drags on Russia’s economy. Even the Central Bank cited this shift in sentiment as a reason for the ruble’s gains in its February Financial Market Risk Review.
Expectations for an improved foreign policy climate have also drawn interest in Russian assets from investors in “friendly” countries. These businesspeople have been converting foreign currency into rubles, increasing overall demand for the Russian currency. Even some Western investors have started looking for workarounds to gain exposure to Russia-linked securities. According to a Bloomberg report in late February, they’ve traded through exchanges in Hong Kong, Budapest, and Vienna to bypass sanctions and capital controls.
Economist Yegor Susin has suggested the ruble’s rise may be less about fresh investment and more about the unwinding of old hedging positions. This refers to foreign companies and funds that once held ruble-denominated assets but took opposite positions to protect against exchange rate risks — betting on the ruble weakening. Now, with those assets being sold, they no longer need these hedges.
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However, the optimism around Russian assets may prove short-lived. Despite high expectations, talks between Russia and the U.S. remain deadlocked. If negotiations fail to produce meaningful progress, the ruble’s fair value — given current oil prices — would exceed 100 to the dollar, according to Olga Kuzmina, head of research at investment firm Renaissance Capital.
So all this growth is just a reflection of investor optimism about Russian assets?
Not entirely. Another major factor behind the ruble’s rally is foreign trade. In January–February 2025, Russian companies exported $18.5 billion more in goods than they imported — a trade surplus 15 percent higher than during the same period last year, largely thanks to a five percent drop in imports.
Exporters have also been converting their foreign earnings into rubles more actively, spurred by high interest rates. In February alone, foreign currency sales by Russian exporters jumped 25 percent — from $9.9 billion to $12.4 billion. At the same time, demand for foreign currency from importers remained noticeably weaker than last year, and household demand also declined, economist Yegor Susin noted. As a result, the market was awash in dollars, euros, and yuan — more than buyers were willing to absorb — which further boosted the ruble.
This kind of ruble strengthening due to a seasonal trade imbalance wasn’t unexpected. Exporters typically earn more in the first quarter, while import and household demand for foreign currency tends to be lower. The same pattern played out last year, and the ruble also gained ground. But in 2025, the trade surplus grew by $2.5 billion, and exporters were far more aggressive in selling foreign currency — leading to a stronger rally than in 2024.
“Exports were strong during the winter, and foreign currency inflows hit record highs, which increased supply on the currency market. At the same time, import activity is usually subdued early in the year, so demand for foreign currency was also low,” said Mikhail Zeltser, a stock market analyst at the investment firm BCS World of Investments, in an interview to RBC.
Who benefits — and who suffers — from a strong ruble?
The main winners are importers: buying goods from abroad becomes cheaper, boosting their profit margins. A stronger ruble is also a welcome development for most consumers as well, since it lowers the cost of imported products and helps slow inflation.
But there are clear losers as well. For exporters, a strong ruble directly cuts into profits. These companies earn revenue in foreign currency but pay many of their expenses in rubles. When the ruble appreciates, converting those earnings yields less, shrinking margins. This impact is especially severe in raw materials industries, where exports still account for a significant share of revenue despite sanctions.
Metals, oil, and coal producers are already feeling the strain. For instance, exports make up 85 percent of revenue at mining giant Norilsk Nickel and 70 percent at aluminum producer UC Rusal, according to Vasily Danilov, lead analyst at investment firm Veles Capital. Coal producers have been hit hardest: in March, nine companies shut down operations due to the ruble’s sharp rise. Oil companies are also under pressure — and the strain is starting to ripple through to the Russian government.
Can a strong currency really be a bad thing for the state?
Yes, an overly strong ruble creates problems for the Russian authorities. On one hand, a firm currency helps curb inflation — a major concern for a country at war. In March, public inflation expectations fell from 13.7 percent to 12.9 percent, the lowest level since September 2024. On the other hand, a stronger ruble reduces export revenues from oil and other commodities, putting strain on the federal budget.
The warning signs are already visible. In February, rent-based taxes from the oil and gas sector fell 18.4 percent year-on-year — a shortfall of 174 billion rubles ($1.71 billion). In March, those revenues dropped again, down 17 percent compared to the previous year. The main reason was the ruble’s sharp appreciation. The 2025 budget was based on an average exchange rate of 96.5 rubles to the dollar, but by April, the rate had fallen below 85. As a result, the government is earning significantly less per exported barrel of oil — about 4,900 rubles ($57) instead of the projected 6,726 ($78).
Declining prices for Russian Urals crude are compounding the problem. In April, the price dropped to $52 per barrel — 25 percent below the budgeted $69.70. To help cover the shortfall, the Finance Ministry intervened in the market for the first time in nearly a year and a half. Between April 7 and May 12, it plans to sell yuan and gold from the National Wealth Fund worth 35.9 billion rubles ($418.2 million).
In short, a weaker ruble would boost budget revenues, as Daniil Tyun, senior analyst at investment firm AMCH, recently told Forbes Russia. But that would also raise the cost of imports, debt payments, and other expenses. “It’s a delicate balance,” he explains. “When the ruble is above 90 to the dollar, revenues go up. Below that, it gets harder to fill the coffers. So the government will aim to keep the ruble weak — but not too weak.”
What effect will Trump’s tariffs have?
While the ruble and Russian assets might seem like a safe haven amid Washington’s tariffs, most analysts agree that this is only temporary.
The ruble’s current rally is likely driven by speculative factors, particularly geopolitical ones, according to Sergey Suverov, investment strategist at Arikapital. He believes this trend isn’t sustainable: “A budget based on an exchange rate of 96 rubles to the dollar will face short-term challenges due to the ruble’s strength.”
The ruble is expected to weaken against both the dollar and the yuan by the end of the year, said Alexander Potavin, an analyst at investment firm Finam, speaking to RBC. “In spring and early summer 2025, the yuan–ruble trading range will likely fall between 11.2 and 12.8 rubles. The ruble’s depreciation against the yuan will likely continue into the second half of 2025. By year-end, we expect the yuan to be trading at around 13.3 to 13.7 rubles,” he said.
The ruble will also feel the effects of the Trump administration’s protectionist policies. The growing risk of a global recession — a concern now echoed even by the U.S. president’s own team — is already reflected in declining commodity prices, particularly oil. This poses a threat to Russia’s export revenues and adds further pressure on the budget, according to Alexander Firanchuk, a senior researcher at the Russian Presidential Academy of National Economy and Public Administration.
Against this backdrop, the ruble’s apparent resilience appears almost unnatural, says Alexey Tretyakov, former head of Aricapital. He attributes it to the lack of a functioning currency market in Russia: foreign investors have pulled out, importers are liquidating stockpiles, and there’s simply not enough demand for foreign currency. Based on current oil prices, Tretyakov estimates the dollar should be trading at no less than 95 rubles — and if oil prices fall further, it could rise well above 100.
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