Russian Ruble Hits 22-month High

The Russian rouble weakened past $86, its lowest in over three weeks, pressured by falling oil prices as US-China trade tensions intensified recession fears.

Oil, Russia’s key export, dropped to its lowest level since April 2021, deepening last week’s losses on concerns that a global downturn will curb demand.

On Friday, China announced 34% tariffs on US goods in response to President Trump’s latest tariff hikes, reinforcing fears of a full-scale trade war.

Russia’s central bank warned that the tariffs could slow global growth, drive inflation, and keep oil prices lower for years.

Despite the recent dip, the rouble remains up around 24% against the dollar this year, largely on hopes for easing geopolitical risks.

The Russian ruble edged up to around 84.2 per USD as traders assessed ongoing ceasefire negotiations between Russia, the US, and Ukraine.

The US brokered separate agreements with Ukraine and Russia to pause attacks in the Black Sea and on energy infrastructure, though details, including the start date, remain unclear.

Washington also pledged to help facilitate the lifting of international sanctions on Russian agricultural and fertilizer exports.

The Kremlin confirmed the agreement but emphasized that it remains conditional on lifting sanctions on banks and companies involved in agricultural trade.

So far in 2025, the ruble has gained approximately 25% against the USD, reaching a June 2023 high of 81.7 in February, supported by hopes of easing geopolitical tensions.

Additionally, high borrowing costs have bolstered the currency.

In March, the Central Bank of Russia maintained its policy rate at 21% as expected while adopting a more optimistic stance on disinflation.

The Russian ruble traded around 84.5 per USD, pausing after a rally earlier this year that pushed it to a June 2023 high of 81.7.

The currency's gains were fueled by hopes of easing geopolitical tensions amid ongoing ceasefire negotiations between Russia and the United States.

Ukraine has already agreed to a 30-day ceasefire, but President Putin has resisted accepting all US proposals, insisting that any agreement must prevent Ukraine from rearming.

So far this year, the ruble has strengthened about 25% against the USD, also supported by higher interest rates.

In March, the Central Bank of Russia kept its policy rate steady at 21%, as expected, while striking a more optimistic tone on disinflation.

The Russian ruble weakened to 85 per USD from the near two-year high of 81.7 touched on March 18th as investors reconsidered the feasability of the US enabling Russia in returning to global financial markets.

President Putin refrained from agreeing to all concessions suggested by the US in a ceasefire deal after a call with US President Trump, limiting previous hopes that a deal could introduce peace with Ukraine.

Consequently, investors trimmed their previous rush onto Russian securities on hopes that the US would reintroduce Russian assets to global financial markets amid their signals of restoring economic ties with Moscow.

Additionally, the ruble was also pressured by caution that the Kremlin may continue to relax capital controls to weaken the currency, as the decline in energy prices magnify the scarcity of budget revenues that come with a stronger ruble.

On the policy front, the CBR held its policy rate at 21%, as expected, and stuck a more optimistic tone on disinflation.

The Russian ruble strengthened past 82 per USD in March, its highest since May 2023, as markets positioned ahead of the possibility of a ceasefire with Ukraine and the eventual removal of some US sanctions.

Russian President Putin held a call with US President Trump after Ukraine accepted the temporary ceasefire terms raised by Washington.

The call followed earlier signals that the US aims to restore economic ties amid the Trump administration's friendlier rhetoric towards the Kremlin.

Consequently, markets piled onto Russian assets on hopes that the country’s reintroduction to foreign investment and trade will support foreign exchange inflows.

In the meantime, the CBR held its rate unchanged at the record-high 21% in its February meeting, but stated that it may consider a rate hike next week.

USDRUB decreased to a 20-month low of 82.11.

Over the past 4 weeks, US Dollar Russian Ruble lost 6.88%, and in the last 12 months, it decreased 9.53%.