On March 18, 2025, the Russian ruble markedly strengthened against the U.S. dollar, marking the dollar's trading rate at 81.5 rubles on the Forex market, its lowest value since June 2024. The euro also fell, trading at around 88.9 rubles during the same period, indicating significant movements on currency markets.
The dollar's drop to as low as 81.43 rubles and the euro's fall to minimums of 88.879 rubles, which occurred during intra-day trading, highlights the currency fluctuations influenced by both domestic and international factors. By 10:59 Moscow time, the euro was recorded at 89.245 rubles, reflecting a 2.07% decrease from previous trading levels.
The Bank of Russia’s official exchange rates for March 18 set the dollar at 84.3059 rubles, down from 85.5694 rubles just days prior, and the euro at 90.8443 rubles from 93.6087 rubles on March 15. This sharp decline is viewed by some analysts, including Mikhail Zeltser from BCS Express, as reflective of broader trends, with foreign currency rates reported to be already 25% below those observed at the beginning of January 2025.
Two primary reasons were cited for this fluctuation: high levels of Russian exports coupled with low imports, and shifts in geopolitical risk premiums influencing the ruble's exchange rate. Analysts noted, "This means the ruble is currently overvalued by approximately 15%," referring to evaluation by SberCIB analysts who predict the dollar may stabilize around 100 rubles by the end of the year.
The strengthening of the ruble can also be attributed to optimistic predictions based on anticipated diplomatic developments. Notably, on the same day of the currency shift, Presidents Vladimir Putin and Donald Trump were slated to discuss improving relations over the telephone. Milchakova from Alpari noted, "The market is reacting positively to reports of progress toward peaceful settlement of the Ukrainian conflict," indicating optimism for reduced sanctions if diplomatic resolutions were achieved.
Market analysts are also closely observing the Central Bank of Russia. The next board meeting scheduled for March 21 may bring changes to monetary policy, which could affect the ruble's value as economic growth strategies are discussed. Investors are interested to see how changes, should they occur, may synergize with the diplomatic engagement between the U.S. and Russia.
The current strengthening of the ruble is seen as temporary among many experts due to anticipated inflation and potential reductions in exports expected to place additional pressure on the currency. Despite this, the prevailing sentiment remains cautiously optimistic about the potential for diplomatic breakthroughs as the ruble holds steady amid prevailing economic uncertainties.
With the conversations between Putin and Trump expected to address key issues surrounding Ukraine, analysts believe these diplomatic dialogues could lead to substantial reshaping of the current market dynamics, especially considering the prospect of sanctions being lifted or revised.
Overall, the developments on the Forex market reflect broader signals from international relations and economic policies, painting a complex picture as stakeholders watch closely for any repercussions from these pivotal discussions. Analysts continue to advise caution, predicting volatility as the ruble’s current situation balances between opportunities and risks inherent in the current international climate.
For now, attention turns to the outcome of the planned presidential dialogue and the upcoming Central Bank meeting, both of which hold significant sway over future exchange rates and market confidence.
