The Russian ruble strengthened to RUB82.3 to the dollar on April 16, making it the best performing currency in the world YTD to  outperforming even the traditional safe haven of gold .

The ruble has strengthened 38% versus the dollar on the over-the-counter market since the beginning of this year, data compiled by Bloomberg shows.

According to the Bank of Russia, the real effective ruble exchange rate (against the currencies of Russia's main trading partners, adjusted for inflation) in March rose by 7.1% compared to the previous month. In annual terms, the exchange rate rose by 19.2% in the January-March period.  

The Central Bank of Russia has implemented a stringent monetary policy, raising the key interest rate to 21% in response to rising inflation driven by increased military expenditure that has pushed the currency’s value up. These high-interest rates have attracted foreign investors seeking higher returns, thereby increasing demand for the ruble

At the same time a positive trade surplus, despite the extreme sanctions regime, has added to the gains. In the first two months of 2025, Russia recorded a trade surplus of $18.5bn, marking a 15% increase compared to the same period in the previous year. This was largely due to a 5% decline in imports and a 25% increase in foreign currency sales by Russian exporters, who were converting their earnings into rubles more aggressively., Meduza reports.

Sentiment has been improved by the return of Donald Trump to the US presidency and the rapidly warming relations between Washington and Moscow as a ceasefire in the Ukraine conflict is now seen as more likely. Some international investors have been buying Russian assets via “friendly countries” in anticipation of a rally in their value that has also increased demand for the Russian national currency.

On the flip side, Trump's Liberation Day tariffs have unsettled investors and undermined confidence in the dollar, which has also pushed up the ruble’s value in relative terms, leading to concerns over its stability and a potential "confidence crisis" that has already hit the US bond and equity markets.

Finally, seasonal patterns have also played a role, with lower import activity in the early part of the year reducing demand for foreign currencies. Simultaneously, strong export performance has increased the supply of foreign currency, contributing to the ruble's appreciation.

For the Kremlin, a strong ruble is not good news as it reduces the competitiveness of Russian exports and also reduces the number of rubles available in the budget for soaring expenditure; a quirk of Russia’s budget is that oil revenues are dominated in dollars, but expenditure is denominated in rubles. A strong ruble thus reduces the number of rubles available to meet budgetary expenditure. The 2025 budget forecasts a federal budget deficit of 0.5% of GDP, however, Ministry of Finance (MinFin) recently said that this target may be missed this year.