Ruble Strengthens to 71 per Dollar, Becomes World's Strongest Currency in Q2
According to Bloomberg data, the Russian ruble has strengthened by about 12% since early April, becoming the world's strongest currency against the dollar, reaching 72.6. In trading on May 20, the USD/RUB pair fell below 71 rubles.
The fact that Bloomberg called the ruble "the world's best currency" is not a compliment to the Russian economy, but a diagnosis of global distortion. In reality, we are not witnessing a free strengthening, but a mechanical imbalance caused by the collapse of imports and forced conversion of export revenues amid geopolitical shock. The USD/RUB pair, breaking through the 71 mark, looks like an anomaly that under normal market conditions would be immediately arbitraged away, but in the current reality has become the "new normal" imposed by administrative rather than market mechanisms.
The Essence: What Is Really Happening
Formally, the ruble is strengthening due to an inflow of petrodollars: Brent prices surged amid the de facto blockade of the Strait of Hormuz, and the average Urals price in April reached $94.9 per barrel. However, the real reason is not the inflow of foreign currency, but a complete paralysis of demand for it. The Central Bank's high key rate (14.5%), combined with sanctions restrictions, has destroyed imports: about 60% of remaining purchases are paid for in rubles, meaning conversion demand for dollars and euros within the country has collapsed. At the same time, exporters are required to sell up to 80% of their foreign currency earnings, creating a constant supply overhang. This is not a "strong ruble" — it is a ruble in an artificial vacuum where the market exists only as a simulation.
Timeline and Context
Back in February 2026, Urals cost $44.6 per barrel, and the ruble traded above 90 per dollar. Then the geopolitical storm in the Middle East blocked the Strait of Hormuz, sending Brent above $110 and Russian oil to $95. But the oil shock merely compounded a structural imbalance: net foreign currency sales by exporters tripled in April, reaching $7.3 billion. Meanwhile, the Ministry of Finance, which resumed purchases of foreign currency and gold under the fiscal rule at about $1.5 billion per month, proved unable to absorb this flow — its interventions simply drown in a sea of export revenues.
Winners and Losers
Losers are obvious: the budget is missing oil and gas revenues due to exchange rate revaluation. In the first four months of 2026, oil and gas revenues plunged 38.3% year-on-year to $30.95 billion. Each ruble of appreciation deducts hundreds of millions of dollars in ruble-equivalent tax from the treasury. Exporters also lose: oil companies receive revenue in a cheaper currency while ruble expenses remain high.
Winners are the population and importers who have managed to maintain supply channels. The ruble's strengthening curbs inflation, which stands at 7.5%, and cheapens purchases of goods denominated in foreign currency. But the main beneficiary is hidden from view: banks and funds playing "carry trade 2.0" through yuan leverage. The scheme, described on Smart-Lab, allows borrowing yuan at 8% and investing in OFZ bonds at 15%, extracting a margin of 7–8% per annum without currency risk. Given the current trend of ruble appreciation against the yuan, this strategy becomes a virtually risk-free money-printing machine for a narrow circle of institutional players.
What the Media Leaves Out
The key non-obvious insight: the "market" ruble exchange rate does not actually reflect real transactions. The price of Russian oil, which underlies foreign currency inflows, is determined by Platts and Argus based on spot deals that account for a negligible share of actual deliveries. The bulk of volumes are sold under long-term contracts with formula pricing, involving completely different figures. Moreover, Indian customs statistics show a discrepancy with "exchange" quotes of $6 per barrel or more. This means that the actual inflow of foreign currency into the country may differ significantly from what traders and even the Ministry of Finance build into their models.
The second hushed-up point: the budget is already bursting at the seams. The Ministry of Finance forecasts an average annual exchange rate for 2026 of 81.5 rubles per dollar, which is 10 rubles above current levels. If the ruble stays below 75 until the end of the year, the budget deficit could exceed planned targets by $40–50 billion, forcing the government either to cut spending or accelerate currency weakening through administrative measures.
Forecast: Next 30 Days and 90 Days
In the next 30 days, the ruble will remain in the range of 69–73 per dollar. Support will come from the tax period at the end of May, when exporters sell foreign currency to pay taxes. However, a correction will begin in June: if the Central Bank keeps the rate at 14.5% at its June 12 meeting without hinting at easing, carry traders will start taking profits, and expectations of dividend payments in foreign currency will create local demand for the dollar.
Over a 90-day horizon, by the end of August, a reversal to 76–80 per dollar is likely. The key driver is the seasonal weakening of the current account and a possible resumption of imports if the geopolitical situation stabilizes. However, if the Strait of Hormuz remains blocked and Brent stays above $115, the inflow of foreign currency could keep the ruble below 75 until autumn.
Editorial Forecast
Asset: USD/RUB pair; direction — moderate growth (ruble weakening) in the next 48–72 hours. The ruble is technically overbought, and after testing the 70.5 level, a bounce to the 72–73 zone is likely due to increased foreign currency purchases by the Ministry of Finance and local profit-taking by exporters ahead of tax payments. Key resistance level is 73.2, support is 70.0. Confidence level — medium. The main risk is an emergency tightening of requirements for selling foreign currency earnings or an unexpected escalation of sanctions pressure, which could push the pair below 70 and break the technical picture. This is the editorial opinion, not an investment recommendation.
— Editorial Team
