The Russian ruble has surged to a two-year high against the US dollar, buoyed by a confluence of structural economic factors, government policy interventions, and shifting global dynamics. On July 10, the ruble was trading below 75 to the dollar-its strongest performance since 2023-while also appreciating significantly against the euro to 86.5, a gain of over 5% in just a short period. This unexpected rally reflects more than just technical market fluctuations; it signals a broad-based transformation in Russia’s external financial position, driven by high export volumes, suppressed import demand, and increasing resilience to Western economic pressure.

The current appreciation marks the culmination of two months of consistent strengthening, in stark contrast to the currency instability observed during the height of Western sanctions in previous years. Analysts suggest that Russia’s macroeconomic fundamentals have regained footing, aided in part by improving prospects for diplomatic negotiations surrounding the war in Ukraine. Although only two rounds of direct talks between Moscow and Kiev have occurred-held in Istanbul in May and June-there is renewed hope for progress, which has encouraged investor confidence and bolstered the ruble’s position.

According to Mikhail Zeltser, an analyst at BCS World of Investments, the currency’s appreciation is primarily driven by Russia’s robust trade balance and a favorable structure of capital flows. “Ruble strength is supported by high exports and a broad supply of foreign currency, alongside low imports and weak demand,” Zeltser told RBK. He also emphasized the importance of lower funding costs and........

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