Russian Rouble Reaches Two-year High

The Russian Rouble reached its highest level against the US dollar in two years as negotiators arrived in Turkey amid expectations of the first direct talks between Moscow and Kyiv since 2022, and domestic demand for foreign currencies declined.

Optimism about the potential end of the Kremlin's war on Ukraine has supported the Russian currency this year, as US President Donald Trump seeks to end the fighting. Data released by the Bank of Russia on Wednesday evening also showed signs of declining domestic demand for foreign currencies.

The rouble rose to 80.2237 against the US dollar on the local market, its strongest level since May 31, 2023, according to Bank of Russia data. The Russian currency also appreciated against the euro to 89.74 roubles.

Since last June, the Russian Central Bank has relied on interbank transactions to calculate the exchange rate after the United States imposed sanctions on the Moscow Stock Exchange.

Yesterday's Central Bank report indicated that appetite for foreign currency purchases within Russia is gradually declining and has already fallen to its lowest levels since the imposition of sanctions on the Moscow Stock Exchange and the suspension of trading in the US dollar and euro.

According to the bank, export-related foreign currency sales declined by only 2% despite the significant drop in oil prices, indicating that exporters are continuing to remit their revenues into the rouble at a steady pace.

Globally, outside major markets, the rouble has achieved record gains this year of more than 40%, outperforming even gold, making it the best-performing asset of 2025 so far.

Although Russian President Vladimir Putin announced Wednesday evening that he would send a delegation headed by Vladimir Medinsky to the negotiations expected today in Istanbul with Ukraine, these will be the first direct talks with Kyiv since 2022. 

Putin later said Ukraine had largely accepted these demands, a claim rejected by the Kyiv government.

Alongside expectations of an improvement in the geopolitical situation, the rouble has been supported by stable currency inflows from exporters and high interest rates, according to the Central Bank. The Bank of Russia has maintained its key interest rate at record levels to curb inflation, creating a favorable environment for carry trades and supporting the local currency.