‘The Mystery of the Ruble Exchange Rate’: What Factors Influence the Russian Currency

Since 2022, the Russian foreign exchange market has faced a series of challenges: geopolitical tensions, sanctions, and the restructuring of trade flows. However, despite the serious turbulence, the ruble has stabilised in the range of 75–85 rubles per dollar and has remained in this corridor for a year and a half, strengthening by 12% compared to 2024. Why this has happened, which factors have been decisive, and what to expect next were discussed by participants in the Bank of Russia’s Financial Congress. Econs provides excerpts from the discussion.

Three Groups of Factors

The factors influencing the ruble exchange rate can be divided into three groups – one-off, structural, and cyclical factors – explained Andrei Gangan, Director of the Bank of Russia’s Monetary Policy Department and moderator of the session:

• one-off factors – major external shocks that lead to sharp exchange rate fluctuations;
• structural factors – changes in the balance of payments caused, for example, by the repayment of external debts or the exit of non-residents;
• cyclical – factors related to the monetary policy being implemented and the dynamics of ruble-denominated instruments interest rates.

According to the results of an audience survey conducted during the session, the main reasons cited for the strengthening of the ruble were lower demand for foreign currency (40%) and tight monetary policy (39%).

Sofya Donets, Head of the Stock Market Analytics Department, T-Bank:

– Nothing is more permanent than the temporary. Therefore, the commodity component should be attributed to one-off factors. Although it is the most constant element, it is precisely here that unexpected changes occur. The year 2022 turned out to be a year of high commodity prices, which contributed to the strengthening of the ruble. A correction took place in the following years, and 2025 was a year of falling commodity prices, yet the ruble remained very strong. Oil, gas and petroleum products still account for around half, or at times more than half, of Russia’s export revenues, and if there is a significant price movement – of 30–40–50% – within this half, it affects the exchange rate. The effect is smoothed by the fiscal rule, but the fiscal rule applies to taxation, not to all revenue.

Capital outflow is another example of a one-off factor. It is certainly worth mentioning the reduction in external debt, which has fallen by more than $150 billion and, as a percentage of GDP, has decreased by more than half since 2022. Another one-off factor explaining the exchange rate mystery is the sanctions affecting the discount on Urals crude oil prices, and the change in the strategy for converting revenue. For example, if an exporter previously converted 80% of its foreign currency revenues and has now switched to converting 100%, the volume of those revenues has increased even though commodity prices have fallen.

One of the structural factors is imports. The share of imports in GDP fell sharply – from around 21% to around 15% of GDP – although, in dollar terms, imports did not decline. The consumer did not see a reduction in import prices with the strengthening of the ruble, so imports did not recover.

The strengthening of the ruble over the past year and a half is attributable approximately 40% to cyclical factors, a further 40% to structural factors, and the remaining 20% to one-off factors. The forecast ruble exchange rate for the end of 2026: a shift towards 85 rubles to the dollar, driven by a cyclical factor – the recovery in investment demand.

Egor Susin, Head of the Market Strategies Centre within the Internal Treasury Department, Gazprombank:

– When we look at the exchange rate, we always consider it from the perspective of trade flows and financial transactions. In terms of trade flows, it is clear that the share of imports in GDP has fallen sharply, and there are both one-off and structural factors involved. Import substitution is taking place in Russia: there has been a significant reduction in imports in the petrochemical and oil and gas industries, as well as in many other sectors. Overall, imports have structurally become smaller, while exports still depend on external demand. Also, imports have shifted from Europe to Asia, where goods are, in one way or another, cheaper while offering comparable quality.

Another factor is external obligations. This factor does not merely bring about a structural change to everything. It makes the stronger exchange rate more stable. In the past, we spent 2.5% of GDP on investment expenditure – interest on debt and dividends – meaning that our net investment income was minus 2.5% of GDP, whereas it is now 0.5% of GDP. This has a significant impact on the exchange rate, and this factor will continue to have an effect. No additional export revenue is needed to meet these obligations.

Another important factor is that foreign currency savings began to be replaced by domestic ruble savings. This essentially acts as a capital inflow: these same exporters reduce their foreign currency liabilities and replace them with domestic ones. They are willing to borrow a lot, and these borrowings will not lead to demand for currency.

Furthermore, there has been a structural change in the foreign exchange market. Most transactions are carried out at the Bank of Russia’s official exchange rate, that is, at ‘yesterday’s’ rate. This makes the market, on the one hand, more stable, but on the other, the market essentially stops looking forward.

Structural factors account for more than 50% of the strengthening of the ruble, whilst one-off and cyclical factors now play a somewhat lesser role. The forecast exchange rate for the end of 2026 is 80–85 rubles to the dollar.

Dmitry Polevoy, Investment Director, Astra Asset Management:

– The strengthening of the ruble is largely attributable to the effects of monetary policy. In 2024–2025, the economy felt the effect of expensive money for the first time in a long while. Perhaps analysts and the business community underestimated the extent of this factor’s influence, which is why, for the past year and a half, the exchange rate dynamics have remained a somewhat unpredictable mystery to everyone.

Spending from the National Wealth Fund (NWF) also affects the market. In 2023–2024, spending from the NWF amounted to trillions, but the central bank ‘mirrors’ this with a lag – which may have contributed to the exchange rate volatility. A more timely ‘mirroring’ of NWF operations would help to smooth out excessive volatility.

The forecast exchange rate for the end of 2026 is above 80 rubles to the dollar. However, much will depend on external factors, such as oil prices and other export commodities.

Andrey Shulgin, economic advisor, Volga-Vyatka Main Branch of the Bank of Russia:

– It’s very difficult to break everything down into factors. Ideally, one would like to gather many factors together. The only good method, although not indisputable, is the general equilibrium method, which takes into account all factors: the financial segment, trade, external debt factors, budget expenditures, and central bank interventions. However, there is a difficulty: fundamental factors often go in one direction, and the exchange rate in another, and this happens even in general equilibrium models. That is, there is a certain optimum, and agents make decisions – these are fundamental factors, but there is something that causes imbalance. Agents somehow decided that they needed to buy currency, something happened with their expectations, and irrationality arose. If the exchange rate cannot be explained within the framework of fundamental factors, it is attributed to such imbalances. Approximately 50% of the exchange rate dynamics in the models is explained by ‘inefficient shocks,’ resulting in a ‘mystery’.