After several years of rapid, war-driven growth, the Russian economy has begun to cool. Oil prices remain well below their peak levels, and the U.S. Department of Energy has already lowered its 2025 forecast for Brent crude’s spot price. Meanwhile, the European Union is rolling out new sanctions against Russia. Yet the ruble appears unfazed by these factors, with an exchange rate steadily holding at around 80 to the U.S. dollar. Meduza examines how the ruble earned the title of 2025’s “top-performing currency” and investigates how soon it might lose that crown.

What’s behind the ruble’s strength? And how is the “Trump factor” helping?

Since the beginning of the year, the ruble has gained nearly 40 percent against the U.S. dollar. In terms of returns, Russia’so currency has become “more valuable than gold.” While the ruble appreciated 38 percent against the dollar in off-market trading, gold rose by only 23 percent over the same period. This surge in the ruble’s value has come despite a 20-percent increase in government spending (from January to April 2025, the government spent 15.5 trillion rubles, compared to 12.8 trillion rubles over the same period in 2024) and a marked slowdown in economic growth (according to preliminary estimates from Russia’s Federal State Statistics Service, GDP growth in the first quarter of 2025 was 1.4 percent, down from 4.5 percent in Q4 2024).

The ruble’s “80-to-the-dollar” level is the result of several factors, but none of them is a truly fundamental driver.

• First, there’s Donald Trump: the escalation of his trade wars has weakened the U.S. dollar, and even the mere fact that negotiations are underway between Washington and Moscow is fueling foreign investor interest in Russia’s high-yield assets.
• Second, within Russia, high interest rates dampen domestic demand for imports, while foreign sanctions restrict capital outflows. The government is also prepared to prop up the ruble by selling foreign currency from its sovereign reserves, as it did in April in response to a 65.6-billion-ruble budget shortfall from expected oil and gas revenues.

Compared to the start of the year, the ruble is now 26 percent stronger against the dollar, despite a 12-percent drop in oil prices, an economist at a European bank told Meduza. The ruble’s biggest strength, he argues, lies in high hopes for potential benefits from the Trump administration’s “public stance.” Without that factor, the economist explained, the ruble would not be trading at 80 to the dollar — more likely, it would be around 95.

Given the failure of a joint E.U.–U.S. effort to tighten sanctions against the Kremlin under Trump, the market may not be wrong.

For the ruble to maintain today’s level against the dollar over the long term, Meduza’s source says there would need to be at least a partial easing of sanctions, in order to boost exports or reduce capital flight — or both. However, even with Russia’s recent diplomatic gains, there’s currently no talk of such easing.

When will the ruble weaken? And how does the current exchange rate affect prices?

• All other things being equal, the ruble is expected to weaken by 10–15 percent before the end of the year (to around 88–92 rubles per dollar) because the full impact of falling oil prices hasn’t yet been factored into the exchange rate, a Russian think tank economist told Meduza.
• According to a senior official cited by Reuters, Russia’s government would be comfortable with a rate of 100 rubles to the dollar, as it would help offset lost budget revenue from a strong currency, sanctions, and falling global oil prices, which have eroded export earnings from commodity sales.
• Investment bank Goldman Sachs is forecasting a 100-ruble exchange rate as early as this summer. Analysts surveyed in April by Russia’s Central Bank predicted an average dollar exchange rate of 95.2 rubles in 2025. Russia’s Economic Development Ministry expects the ruble to fall to 98.7 against the dollar by the end of the year.

The ruble is indeed overvalued, and falling oil prices could trigger its depreciation, acknowledges Dmitry Belousov, chief macroeconomist at the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF), a think tank closely affiliated with Russia’s federal government. Belousov warns that the ruble is at risk of over-weakening for “purely psychological reasons.”

For now, however, the ruble’s strength has helped slow inflation. In April 2025, Rosstat measured inflation at 0.4 percent, down from 0.65 percent in March, 0.81 percent in February, and 1.23 percent in January. According to CMASF, the category “non-food goods (excluding produce)” has seen five straight weeks of deflation (−0.45 percent overall, −0.31 percent in the last three weeks), which is already raising alarms among analysts: “The combination of a sales crisis and deflation in non-food goods, along with rising interest payments, rent, and leasing costs for retail businesses, could push the sector into a serious crisis.”

The main sources of inflation now are food and pharmaceuticals, with prices for medicine rising across the board (up 0.53 percent over the past three weeks).

“Inflation over the past month is already fairly close to the Central Bank’s target (looking at short-term annualized metrics), but that stability is largely built on the strong ruble and high interest rates, and none of that comes for free,” an economist at a Russian think tank told Meduza. “That’s why I strongly believe the key interest rate will start to come down this summer.”

His colleague at a European bank agrees that a cautious rate-cutting cycle could begin as early as June. In his view, bringing the rate back to around 10 percent will take several years even under optimistic scenarios. At its most recent meeting in April, Russia’s Central Bank again decided against any rate cuts and held at a record-high 21 percent for the fourth consecutive time. Lowering the interest rate would help support the cooling economy, but it would also put downward pressure on the ruble, encouraging its devaluation.

Are new sanctions a threat to the ruble? Does the West have any leverage over Russia?

The latest, 17th round of E.U. sanctions against Moscow proved toothless, watered down by Hungary, which continues to purchase not only Russian pipeline gas but also oil, thanks to a special exemption from the West’s oil embargo. (For more on the futility of European sanctions, see analyses by Re: Russia here and here.)

After his phone call with Vladimir Putin, Donald Trump disappointed European leaders by announcing that he would not impose any new sanctions on Russia: “Because I think there’s a chance of getting something done, and if you do that, you could also make it much worse. But there could be a time where that’s going to happen.”

The centerpiece of Europe’s 17th sanctions package is the targeting of nearly 200 vessels in Russia’s shadow tanker fleet. However, the E.U. lacks a functional mechanism for monitoring compliance with such restrictions, which are only truly effective when the U.S. enforces them through secondary sanctions. Today, the majority of tankers expanding the shadow fleet carrying Russian oil come from Greek and other European shipowners, according to a Brookings study published in late April 2025.

The E.U. had originally planned to review its oil price cap every two months, but it wasn’t until three years after the cap was introduced that Brussels, as part of its 18th sanctions package, proposed lowering it. The cap, however, is widely ignored. Sources speaking to Reuters say the idea is to lower the maximum price from $60 to $50 per barrel — a logical move, given that in April, Russia’s Urals crude was already trading below $50 due to new U.S. tariffs.

The West has run out of meaningful new ways to escalate sanctions on Russia. The only potentially effective option is imposing very tough secondary sanctions on anyone even indirectly trading with Russia. “That hasn’t happened, and it probably won’t,” said an economist at a Russian think tank. Enforcing such sanctions is costly and complicated, and imposing restrictions that can’t be effectively monitored results in reputational damage, not to mention strained relations with the countries targeted by secondary sanctions, the expert warned.

Text by Yulia Starostina

Translation by Kevin Rothrock