RUSSIAN Ruble Crisis

追加: 2026-05-05

[00:00:00]Hi, welcome back to the channel. In today's episode, I want to talk to you about what's happening with the Russian ruble and why what looks like strength on the surface is actually continuing to cause major problems for Russian companies, for the Kremlin, and the wider Russian economy. But before we get into the details of all of that, could I ask anybody that hasn't subscribed yet to please hit that subscriber button? It really helps me with the algorithm and also make sure that you don't miss any further updates. So when you look at currencies, there's a basic assumption that most people make. If your economy is doing well, your currency tends to be strong. There's demand for your goods and services. International buyers need your currency and that pushes the value up. That's the general consensus view.

[00:00:45]And the reverse is also true. If your economy is struggling, then trade will be falling and investors will be pulling out. And normally that means that there's weak demand for your currency.

[00:00:55]and so your currency weakens. Now, a lot of people have looked at the Russian ruble and said, "Well, hang on a minute.

[00:01:02]The Russian ruble is doing really well.

[00:01:04]So, doesn't that prove that the Russian economy is actually holding up really well, too?" And the answer to that is no. Because if you dig into the detail, the relationship between the ruble and the Russian economy has effectively broken down. If we look at the 5-year picture, so anybody that's been missing my graphs, you'll be pleased to see that there's one behind me now. The headline numbers don't look that dramatic. If you look at what the situation was 5 years ago, one US dollar was trading for around 74 rubles. Today, it's trading for around 75. So, at face value, it looks like nothing much have changed in the last 5 years. But that completely hides the reality of what's been happening. If we go back to February 2022 when the war in Ukraine started, the ruble collapsed really quickly. It fell to around 125 against the US dollar as markets reacted to the sanctions and the expectation that the Russian economy would come under severe pressure. And then something quite extraordinary happened. The ruble didn't just recover.

[00:02:14]It surged and strengthened to around 50 to1 US dollar which is one of the strongest levels that it's ever been trading at. But that wasn't a free market move. It didn't reflect what was happening in the Russian economy. This was a direct result of aggressive state intervention. The Kremlin introduced capital controls, restricted the movement of money, forced exporters to convert foreign earnings into rubles, and effectively propped up the currency.

[00:02:42]So from mid 2022 through to the end of 2024, the ruble then weakened again, drifting down steadily to around 110 against the dollar. And at that level, it was just too much for President Putin. He decided that something had to be done. And it represented a significant devaluation to where the ruble had been trading before the war started. But since the start of 2025, we've seen another amazing reversal. The ruble has strengthened again, moving back to around 75 to the US dollar, which at face value looks amazing given everything that's been going on. But let's be clear, the Russian economy is still under significant strain.

[00:03:25]Sanctions are in place, trade with the West has collapsed, and many international companies have exited the country. So why is the ruble trading at such a strong level? Well, the key point here is that this is no longer a normal currency operating in a free market.

[00:03:42]This is now effectively a managed currency. It's being managed by the Kremlin. The first major factor is that the volume of trading in rubles has collapsed. International demand for the currency has fallen sharply because many countries are no longer dealing with Russia at all. And even those countries that are still doing business such as India and China are choosing not to use rubles as the form of payment. They're using other currencies like the Chinese yuan, the US dollar or the euro or anything else that they can think of.

[00:04:15]India is using United Arab Emirates durhams. So in a normal market that collapse in demand would have led to a much weaker ruble. But because the market is now so much smaller, it's easier for the Russian authorities to control it. The Kremlin has introduced strict capital controls limiting the ability of money leaving the country.

[00:04:36]Exporters are still required to convert a significant portion of their foreign currency earnings into rubles and the central bank has been actively managing liquidity in the system. So what you're seeing is not a reflection of economic strength. It's a reflection of state control and this is where the problems start to emerge for Russia because a strong currency in this situation is actually damaging for the Russian economy. Most Russian companies particularly exporters earn their revenues in foreign currencies. That could be US dollars, Chinese yuan or euros or any currency basically. But when they report their results, they have to convert those revenues back into rubles. All Russian companies have to show their accounts in rubles. If the ruble is strong, that conversion results in lower revenues and lower profits in local currency terms. So they're basically reducing the amount of profit and revenue that they're declaring in rubles. So effectively a stronger ruble is squeezing corporate earnings and that has a knock-on effect for tax revenues because the Russian government collects a large proportion of its income from taxes on corporate profits particularly from energy companies. If those profits are being reduced due to currency effects then tax receipts also go down.

[00:05:58]So ironically a strong ruble can actually weaken the government's fiscal position. There's also a competitiveness issue. A stronger currency makes exports more expensive on the global market.

[00:06:10]That makes Russian goods less attractive compared to alternatives from other countries. At a time when Russia is already struggling to maintain export volumes due to sanctions and logistical challenges. This is yet another headwind. And then you've got the issue of domestic liquidity. Because companies are being forced to convert foreign currency into rubles. They're holding more rubles than they might otherwise want. But at the same time, access to foreign currency is restricted. So you end up with distortions in the financial system. Companies may struggle to pay for imports even if they have strong rubal balances because they can't easily access the foreign currencies they need.

[00:06:52]And that feeds into inflation pressures, supply chain disruptions, and inefficiencies across the whole Russian economy. So what you're seeing here is a currency that looks stable on the surface but is actually masking a lot of underlying stress. This is not a sign of strength. It's a sign of control. And historically when you see a heavily managed currency like this, it tends to come with long-term consequences because markets don't just disappear. They just go underground or become distorted. So the key takeaway from all of this is that you cannot look at the ruble and use it as a proxy for the health of the Russian economy. The two have effectively become totally disconnected.

[00:07:34]And in many ways, the current strength of the ruble is actually adding to the challenges that Russia is facing rather than solving them. So as always, I'll keep you posted on any further news and developments on this and any stories as and when they occur. Hopefully, you found today's video useful, informative, and most importantly, thought-provoking.

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