Published by Gleb Bryanski
MOSCOW (Reuters) – With Donald Trump's promise to quickly end the war between Ukraine and Russia, market players are starting to look at what impact it might have on the ruble. , which became a disappointment after sanctions.
HOW HAS THE RUBLE DONE IN RECENT MONTHS?
The ruble started the year falling to its weakest level since March 2022 but has strengthened by around 10% since then, becoming the best performing currency across emerging markets. come up in 2025.
Despite US energy sanctions imposed on January 10, the currency is on track for its best month since emergency interest rate hikes, capital controls and other measures after the February 2022 invasion of Ukraine.
In 2024, it began to strengthen in mid-April as military advances marked a tide change in Russia's favor and despite a decline in oil prices, the main export was the Russia.
Ukraine's invasion of Russia's Kursk region reversed that. losses accelerated in November when Washington slapped sanctions on Gazprombank which handles energy export payments and was a key vehicle for foreign currency receipts.
WHAT WILL THE TRUMP-PUTIN RELATIONS BE LIKE?
Some analysts predict that some Western sanctions on Moscow could be partially lifted if Trump holds direct talks with Russian President Vladimir Putin – although even Trump advisers have admitted not it is likely that any resolution to the war will come immediately.
Some expect a rally in the ruble led by payments for Russian exports and the resumption of some foreign investment amid a gradual reintegration into the global system.
Others point to significant pent-up demand for imports from industries such as aircraft or power generation, where existing needs for spare parts amount to tens of billions of dollars. the ruble could be sent into free fall.
However, sanctions are likely to remain in place for the most part until a lasting solution to the war is found, which could take years.
WHAT IS THE ROUBLE WORTH?
The ruble is driven by war developments and sanctions rather than macroeconomic fundamentals, making it challenging to calculate its fair value.
Estimates are getting scarcer. Many international analysts have stopped publishing research and calculations of rubles.
The Moscow Stock Exchange (MOEX), Russia's main FX trading platform, and Russian banks have developed data products for the domestic market. Some non-Russian banks continue to provide ruble data to international data services.
The central bank said in a Jan. 17 report that the real effective exchange rate, a measure used to estimate the “fair value” of a currency, was 9% below its 10-year median.
Russian business leaders, including the CEO of Sberbank German Gref and the CEO of VTB Bank Andrei Kostin have said that a rate slightly higher than 100 to the dollar is comfortable for the economy.
IS THE RUBLE CARRYING MONEY FOR ANOTHER EMERGENCY?
Ruble movements have been much more predictable since the spring of 2022. Market panic at the start of the war saw the currency down to 150 to the dollar. Russia was trying to stop forex flows, banning the sale of assets by foreign companies and imposing forex sales requirements on exports.
As imports decreased due to Western sanctions, creating a forex glut, the ruble strengthened significantly to around 50 to the dollar in June 2022. It last traded at around 101.5 to the dollar.
HOW DOES THE RUSSIAN FOREX MARKET WORK UNDER SANCTIONS?
Dollar and euro trades moved to over-the-counter markets between banks after the US approved MOEX in June 2024.
becoming the most traded currency on MOEX and currency of choice for central bank interventions.
The central bank sets official exchange rates based on interbank transaction data provided by lenders and – together with ruble/dollar futures trading on MOEX – provides the best proxy for market rates. over the counter, according to FX traders.
Authorities say they will stick to a floating exchange rate policy.
WHAT DO BANKS AND COMPANIES DO IN THE FX MARKET IN RUSSIA?
Just under half of Russia's 316 banks are not subject to sanctions and can buy and sell dollars and euros. Subsidiaries of some major Western banks such as Italy's UniCredit, Hungary's OTP and Austria's Raiffeisen Bank International also operate there.
Domestic demand for dollars and euros comes from importing companies, as 15% of imports still come from Europe but the share of dollars and euros in foreign trade seen going down.
