Noor Trends News, Technical Analysis, Educational Tools and Recommendations
In a year marked by geopolitical strain and economic uncertainty, the Russian ruble delivered a striking performance. Between January 1 and December 24, 2025, the currency gained nearly 30% against the U.S. dollar, climbing from 113.73 to 78.99 per dollar. It was one of the ruble’s strongest annual showings in years, driven largely by tight monetary policy and subdued imports, even as volatility lingered amid falling oil prices.
A Volatile Path, Not a Straight Line
The ruble’s ascent was anything but smooth. It weakened early in the year, touching levels near 115 per dollar in January, before staging a sharp recovery that culminated in a July peak around 74. Monthly movements reflected a currency constantly reacting to shifting energy prices and policy signals. While the first half of the year saw rapid strengthening, the second half brought choppier trading and renewed pressure.
What Powered the Economy in 2025
Russia’s economic backdrop was defined by competing forces. Elevated military spending supported industrial output but intensified inflationary pressures and deepened labor shortages. Unemployment fell to a historic low of 2.3%, pushing wages sharply higher. At the same time, declining oil revenues strained public finances, raising concerns about fiscal sustainability and consumer demand heading into 2026.
Inflation Cools, Deficits Grow
Inflation moderated noticeably, easing from 9.5% in 2024 to around 5.7% in 2025. Yet this improvement came alongside widening budget deficits, highlighting the imbalance between state spending commitments and softer energy income. Average wages jumped by roughly 16%, a pace fueled by labor scarcity but widely seen as difficult to maintain.
Strength With Cracks Beneath the Surface
Despite its headline gains, the ruble remained fragile. Sanctions continued to limit trade flows, demand from China slowed, and export volumes weakened. These pressures resurfaced late in the year: in November, the average exchange rate slipped sharply to nearly 93 per dollar, from around 81 in October, exposing how quickly sentiment could turn.
Source: TradingView
Interest Rates: Supportive but Costly
The Central Bank of Russia played a decisive role. After lifting its key interest rate to a record 21% in late 2024, it cautiously eased policy through 2025, ending the year at 16%. High rates helped contain inflation and underpin the ruble, but they also weighed heavily on growth. Credit became more expensive, bankruptcies rose, mortgage subsidies were scrapped, and real wages came under pressure—raising uncomfortable echoes of stagflation.
2026: A Test of Resilience
Looking ahead, the risks are mounting. Prolonged tight monetary conditions could tip the economy into a deeper slowdown in 2026. The mix of stubborn inflation and weakening growth threatens to rival, or even exceed, the strains seen during earlier crises in 2020 and 2022.
A Strong Finish, an Uncertain Future
The ruble’s resilience in 2025 stands as a notable achievement, but it may prove temporary. Sustaining stability will depend on careful interest-rate calibration, firmer fiscal discipline, and an economy adapting to a world of lower energy revenues. As the Central Bank charts its next moves, investors and policymakers alike will be watching closely to see whether this year’s currency strength marks a genuine turning point—or merely the calm before a harsher economic storm.
