The Russian Ruble: How the World’s Best-Performing Currency in 2025 Defied All Expectations

Despite a prolonged war, plunging oil prices, strict international sanctions, and a struggling economy, the Russian ruble has emerged as the strongest-performing currency of 2025 — a development that has stunned global financial markets.

According to Bank of America, the ruble has surged more than 40% since the beginning of the year, marking a dramatic turnaround after years of steep depreciation. So, what’s driving this remarkable rally?

Capital Controls & Tight Monetary Policy: The Real Forces Behind the Ruble's Rise

Analysts say the ruble’s rally isn’t about investor confidence — it’s about control.

“Capital restrictions, high interest rates, and hopes for a peace deal between Russia and Ukraine are the key drivers,” said Brendan McKenna, international economist at Wells Fargo.

The Central Bank of Russia (CBR) has kept interest rates at 20%, making borrowing extremely expensive. This discourages imports, reducing demand for foreign currencies like the U.S. dollar — and in turn, strengthens the ruble.

Strong Exports, Weak Imports = Ruble Demand Soars

Russian exporters — especially in the oil and gas sector — are required to convert a portion of their foreign currency earnings into rubles. Meanwhile, importers are buying fewer foreign goods due to weak domestic demand, meaning they no longer need to sell rubles to buy dollars or yuan.

Between January and April 2025, Russian exporters sold $42.5 billion worth of foreign currencies, a nearly 6% increase from the previous four months, according to CBR data.

Additionally, a wave of stockpiling in late 2024 (especially of electronics and vehicles) has since cooled off, reducing import pressure and supporting ruble strength.

CBR’s Shrinking Money Supply Strategy Pays Off

The Central Bank has also been actively shrinking the money supply, a move that supports the ruble further. According to Professor Steve Hanke (Johns Hopkins University), Russia’s money supply was growing at 23.9% annually in August 2023, but since January 2025, it has contracted to -1.19% annually.

This strict monetary stance has significantly contributed to the ruble's appreciation.

Is the Rally Sustainable?

Despite the impressive gains, analysts are skeptical about long-term sustainability. Russia’s economy is heavily reliant on energy exports, and with oil prices down sharply in 2025, foreign currency inflows are at risk.

“The ruble may have peaked. Lower oil prices are likely to drag down export revenues and eventually weaken the currency,” said economist Andrei Melaschenko.

Moreover, if peace talks between Russia and Ukraine gain traction, capital controls may be lifted and interest rates may be cut, which would reduce the ruble’s artificial support.

“The ruble could decline rapidly if a ceasefire is reached,” McKenna added.

Economic Trade-Offs: Strong Ruble, Lower Revenues

The flip side of a strong ruble is reduced competitiveness for Russian exporters, especially in the oil sector, where declining global prices are already tightening profit margins.

Russia’s state budget is also under pressure, with oil and gas revenues making up about 30% of total federal income in 2024, according to Heli Simola, senior economist at the Bank of Finland.

“The Finance Ministry has had to lean more on the National Welfare Fund to meet spending needs,” Melaschenko said. “Further cuts to non-priority programs may be necessary.”

Conclusion

The ruble’s surprising rise in 2025 is less about economic strength and more about policy-driven currency support. With strict capital controls, high interest rates, and limited imports, Russia has managed to temporarily shield its currency.

However, falling oil prices, fragile peace negotiations, and the risk of policy shifts all pose serious questions about how long this ruble rally can last.

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