Ruble Recovery: The Path to Stability Hinges on Sanctions Relief

After plummeting to 100 rubles per dollar last summer, the Russian ruble has made a notable recovery and is currently holding steady at around 90 to the dollar.

For the ruble to gain further strength or maintain its current position, a considerable reduction in geopolitical tensions and the removal of Western sanctions on Russian oil exports are crucial, according to a note from Renaissance Capital on Monday.

Predictions indicate that the average exchange rate for the ruble in 2025 is expected to fluctuate between 80 and 100 rubles per U.S. dollar, influenced by external factors.

As of early 2025, Russia’s inflation accumulation since 2021 reached 31.8%, in contrast to 12.4% in developed nations, based on data from the International Monetary Fund. This difference suggests that under normal economic conditions, an appropriate exchange rate would be around 91 rubles per dollar, an increase from 74 in 2021, as noted by analysts at Rencap.

“Nevertheless, the ruble’s path will not be determined by economic fundamentals alone; capital flows, the trade balance, and geopolitical events will play significant roles,” Rencap remarked.

A major limitation on the ruble’s appreciation is the necessity of maintaining a current account surplus, which has been essential for stabilizing Russia’s external financial standing. Even if geopolitical tensions subside, ongoing capital outflow or persistent domestic demand for foreign investments would restrict any strengthening of the ruble. Furthermore, the Russian Central Bank is expected to continue enhancing its reserves, imposing additional constraints.

Rencap has presented four possible scenarios for the ruble’s exchange rate in 2025:

Ceasefire negotiations between Russia and the U.S. commenced in Riyadh on February 18 and have progressed favorably for Russia. Ukraine’s European allies are growing increasingly alarmed by U.S. President Donald Trump’s pro-Russia stance, which closely mirrors Kremlin narratives. Prior to the commencement of talks, the White House made two significant concessions to Russia: relinquishing occupied territories and ruling out NATO membership for Ukraine.

Since then, U.S. National Security Advisor Mike Waltz has stated that any peace agreement should be based on the terms established in the unsuccessful 2022 Istanbul peace negotiations—another longstanding demand from Putin—and over the weekend, Waltz suggested that sanctions relief could be part of the arrangement.

In contrast, Trump is exerting intense pressure on Ukrainian President Volodymyr Zelenskiy to forfeit rights to 50% of the revenue generated from all of Ukraine’s natural resources. He has also proposed a three-step peace process that includes presidential elections as the second stage, prior to finalizing a ceasefire agreement, which may result in Zelenskiy being replaced.

Despite these forecasts, Rencap warns that two significant risks persist. First, the financial account flows may not align with predictions due to unexpected capital movements or the potential unfreezing of assets. Second, structural changes within Russia’s economy—such as shifts in import reliance—create uncertainty regarding how domestic demand impacts the balance of payments.

“In the end, while the ruble appears stable in the short term, it conceals underlying volatility. Although the currency may appreciate if geopolitical tensions ease, its long-term stability hinges on policy changes, dynamics in capital markets, and Russia’s ability to navigate a sanctions-impacted economic landscape,” Rencap concluded.

This article was originally published in bne IntelliNews.