Why the Ruble Refuses to Fold: 90 Days of Dollar Drama in Moscow

When most of the world expects the Russian ruble to wilt under pressure, it does something perverse: it claws back ground. Over the past three months, the US dollar has lost 6.1% to the ruble, a move that’s left many traders blinking at their screens. Behind this counterintuitive rally lies a cocktail only Moscow could serve—one part fortress central banking, two parts global energy intrigue, with a dash of geopolitical suspense.

The 18% Solution: Russia’s High-Voltage Interest Rates

Forget the days of ultra-loose monetary policy. In 2025, the Bank of Russia has kept its key rate at a punishing 18%—down from a record 21%, but still a world away from the single-digit comfort zone. Why so high? The message is clear: defend the ruble at all costs, even as inflation lingers at 9–10% year-on-year. For foreign exchange markets, these rates are a siren song. Carry traders—those who borrow in low-yielding currencies to buy high-yielders—find the ruble irresistible, so long as the central bank stands guard and capital controls discourage a sudden exodus.

Shadow Tankers and the New Silk Road

Sanctions may have rerouted Russian oil, but they haven’t stopped it. India now absorbs nearly 80% of Urals crude shipments, while China’s appetite for Russian energy shows no sign of indigestion. Despite a 3.5% ruble drop in January and a narrowing trade surplus (June’s surplus was $9.3 billion, down from $11.8 billion a year prior), the flow of dollars and yuan into Russia’s coffers has stayed robust enough to keep the currency off the mat.

Capital Flight or Capital Trap?

Here’s the paradox: more than $280 billion in capital has left Russia since 2022, yet the ruble doesn’t collapse. Why? Regulatory escape hatches are closing. Capital controls, FX interventions, and a crackdown on “friendly” versus “unfriendly” currencies have created a walled garden. The ruble is less a free-floating flower, more a bonsai pruned by policy hands. For the past quarter, this regime has kept speculative attacks at bay, allowing the ruble to stage its 6.1% comeback against the dollar.

The Disinflation Mirage

Inflation has cooled—June’s CPI hit 9.4%, down from April’s 10.2%—but don’t mistake this for a return to normal. Public inflation expectations still hover at 13.5%, the highest in six months. The Bank of Russia’s high rates aren’t just for show—they’re a firebreak, keeping import demand subdued and the ruble in demand for locals and opportunistic global investors alike.

Chess Moves on the Global Board

This quarter’s ruble resilience isn’t born in Moscow alone. The US dollar has shown signs of fatigue—DXY stands at ~98—and as the Federal Reserve inches closer to rate stability, the global carry trade has regained its swagger. Meanwhile, the Shanghai Cooperation Organisation summit in Tianjin underscored Russia’s pivot eastward, with trilateral trade (China-India-Russia) surging to $452 billion in 2023. The more Russia is pushed out of Western markets, the tighter it embraces Asia—and every petro-yuan or rupee helps prop up the ruble.

Smoke, Mirrors, and What’s Next

The ruble’s 6.1% rally is real, but don’t confuse resilience with invulnerability. The foundations are narrow: sky-high rates, capital controls, and energy exports to a handful of friendly buyers. Should oil prices slip further (Brent at $62/bbl), or if sanctions find new teeth, the ruble’s spell could break as quickly as it began. For now, though, the Russian currency remains the FX market’s most improbable comeback kid—defying the odds, defying gravity, and defying easy explanation.