Western sanctions are partly to blame.

In the days after Russia invaded Ukraine in February 2022 and the west imposed sanctions, the rouble collapsed. The number of roubles to one US dollar quickly fell from about 78 to 138 – a huge move in the world of forex (foreign exchange), and terrifying for those with their wealth in the Russian currency. 

Since then, sanctions have tightened and the war shows no signs of reaching an end, but something unexpected has happened to the rouble. Many commentators had thought it would continue weakening, but instead it is now stronger than when the war began. The US dollar is now worth 57 roubles, the best exchange rate in about four years. 

Rouble v US dollar

So why has this happened, and what does it mean for the future?

The pre-war rouble

First the backstory. The exchange rate of any country is determined by capital and trade flows: in other words, what money is moving in and out of the country, and the value of exports compared to imports. For the rouble, trade flows are usually more important because Russia is a major oil exporter. 

The oil price, as you can see from the chart below, is linked to the rouble – when oil rises, the rouble gets stronger. The price of oil has broadly been climbing since the first half of 2020, which benefited the rouble in the run-up to the war. 

Rouble v oil