Why has the dollar dropped to its lowest level in two years? Analysis

The official dollar exchange rate dropped below 80 rubles for the first time in two years. On May 22, the Central Bank set it at 79.75 rubles. The national currency has risen sharply since the beginning of the year, and then stabilized at high levels. The reason for the strengthening of the ruble and how long it will last is in the Izvestia article.

The impact of the Central Bank on the currency

• The central Bank set the official dollar exchange rate at 79.75 rubles on May 22, 2025. This is the lowest value since May 2023. Since the beginning of 2025, the ruble has strengthened against the dollar, with an increase of about 11% since the beginning of March.

• In recent years, inflation in Russia has exceeded the target, and the Bank of Russia's goal is to reduce it to 4%. However, as of April 2025, it still exceeds 10%. As a result, the Central Bank still holds an extremely high key rate, now it stands at 21%. It is the high rate that, for the most part, ensures a temporarily strong exchange rate. When inflation slows down, the Central Bank will lower the rate and the exchange rate will return to an equilibrium position.

The reasons for the growth of the ruble exchange rate

• The strengthening of the ruble can also be attributed to the fact that foreign currency within Russia has become an uninteresting asset, since it is difficult to export it somewhere or place it profitably. In turn, investments in ruble assets continue to bring good returns, taking into account high real rates.

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• At the same time, the protectionist policy of the United States also plays a role: already imposed duties and threats to impose protective tariffs have led to a weakening of the dollar. This played into the hands of the Russian currency.

• In addition, with the arrival of Donald Trump in the White House, the United States advocates establishing a dialogue with Moscow and ending the conflict in Ukraine as soon as possible. The abandonment of attempts to ensure Russia's international isolation has provoked the interest of Western investors in the Russian market, especially given the high return on assets against the background of the Central Bank's interest rate.

• Another factor in the strengthening of the ruble is the increased volume of currency sales by exporters in the domestic market. So, since the beginning of the year, they have been selling about 90% of their foreign exchange earnings at a rate of 36%.

• Also in 2025, the budget did not receive 65.6 billion rubles of planned oil and gas revenues. In order to support the ruble, the government switched to selling the currency, which it had previously only purchased. As a result, from April 7 to May 12, 2025, the daily volume of sales of foreign currency and gold amounted to about 1.6 billion rubles.

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Forecast for the year

• In the near future, the ruble will continue to strengthen due to the approach of the tax period. The ruble is likely to trade in the range of 79-86 per dollar by the end of May.

• The established course does not look balanced. In 2019-20, a dollar was worth about 70 rubles. However, the difference in accumulated inflation between Russia and the United States has since reached about 30%.

• The ruble is likely to weaken in the medium term. Experts interviewed by the Central Bank believe that by the end of the year the exchange rate may reach about 95 rubles per dollar. In turn, the Ministry of Energy expects that the exchange rate will be higher — about 98 rubles per dollar.

• At the same time, sanctions, including the 17th package of the European Union, are unlikely to have a strong impact on the Russian currency. One of the main factors that could push the ruble down is the Central Bank's rate cut. As a result, the profitability of bank deposits will decrease, so some of the population will want to invest in foreign currency. Cheap oil can also reduce the ruble exchange rate, which will lead to a decrease in the volume of currency from exporters in the domestic market.

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• In addition, the growing uncertainty in the global economy should be taken into account against the background of the trade wars initiated by US President Donald Trump. Although the volume of trade between Moscow and Washington is at a minimum, the protectionist policy of the United States may reduce Russia's trade balance with third countries.

• Thus, the strengthening of the ruble is related to both external and internal economic phenomena. Gradually, by the end of the year, the ruble will weaken, and the exchange rate will be more than 90 rubles per dollar.

When writing the material, Izvestia took into account the opinion and talked with:

● Finam Financial Group analyst Alexander Potavin;

● Natalia Orlova, Chief Economist at Alfa-Bank;

● Anton Tabakh, Chief Economist at the Expert RA rating agency;

● Alexey Antonov, Head of Investment Consulting at Alor Broker IC;

● Spartak Sobolev, Head of the Alfa-Forex Investment Strategy Research Department.