Back in February 2022, it seemed like the Ruble would rapidly collapse. However, nowadays, the USD/RUB exchange rate looks better than at any time in the past year:


You could argue that this is a "fake" exchange rate, but it seems like Russia keeps increasing the limit on foreign currency exchange, so citizens are indeed able to convert their rubles for dollars if they wish. Does this signify that Russia's economy is doing well despite the war — and, by proxy, that Putin is doing much better than previously expected?

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    Most sanctions would only have delayed effect. In half a year to two years you may expect to see problems. Some industries are crippled, such as car makers.
    – alamar
    May 16, 2022 at 22:10
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    Stability and prosperity are not the same thing. One could argue the North Korean economy is fairly stable. And I'm alluding that because they also saw an appreciation of the local currency, relative to the USD, even on the black market, most likely due to a collapse in imports during the pandemic. May 16, 2022 at 23:13
  • If you look at it from the other side and how much US currency it can purchase the increase doesn't look as large as it does from the way you are looking at it.
    – Joe W
    May 17, 2022 at 0:24
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    this is not a political question, and would be better answered in economics and monetary forums
    – Aksakal
    May 17, 2022 at 21:43
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    @Trilarion I'm interested in seeing if the Ruble exchange rate is expected to translate into political stability for Putin May 18, 2022 at 6:48

7 Answers 7


Exchange rate is not an indicator (or a very poor one) of economic well-being:

  • it can be controlled by a central bank, via increasing money supply ("printing money", although nowadays it is mostly electronic), buying or selling foreign currency, changing borrowing rates, issuing treasure notes, imposing tariffs on imported goods, etc.
  • exchange rate also have different effects on different aspects of economy: high exchange rate is good for those who go to spend their money abroad or buy lots of imported goods. However, it also means that the goods/services produced by the country are more expensive abroad, which makes them less competitive and may result in slower economic activity. Cheaper currency also means cheaper labor and is used sometimes as a way of fighting high unemployment.

As an example, one could cite the US Central Bank policy of "Quantitative easing", which is actually issuing electronic money - the US money supply M0 (i.e., the actual money, not counting the bank loans) has tripled or even quadrupled during the end of G.W. Bush and Obama presidency. While this made dollar cheaper abroad, it arguably contributed to the economic recovery. On the other hand, European countries during the same period suffered from impossibility to devalue their currency, since it is controlled by the European central bank, which adopted rather conservative monetary policy. This however was certainly good for those (notably in Germany), who keep their money as savings in their bank accounts, and who would risk these saving made worthless, if euro were devalued.

Returning to Russia - devaluation of money is of special political importance in view of the hyperinflation that the Russians lived through in the 90s (adding multiple zeros - although not reaching the level of Russian hyperinflation during WW1 or the German inflation in post-WW1 years).

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    I agree that exchange rate is not the best indicator. However, I would just like to comment on politics vs economy. For most Russians, a "strong ruble" IS an indicator of a strong economy. This is based on the hyperinflation of 90s, and plays a big role on the amount of support for the govt. On the other hand, Russia is a resource-rich country, which imho would benefit from a weaker ruble, especially if we manage to reindustrialize and get manufacturing back on track. In the context of sanctions though, exchange rate doesn't matter too much - not much exchanging if there's no trade.
    – MishaP
    May 20, 2022 at 10:57
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    I guess what I'm getting at, is a strong ruble is more likely to spur domestic investments into manufacturing and business on a wave of patriotism, but I believe a weak ruble is ultimately better for the economy.
    – MishaP
    May 20, 2022 at 10:59
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    @MishaP I tried to demonstrate the classic trade-off: inflation means deteriorating purchasing power of the population (real wages/savings decrease, if they remain nominally the same), but it makes easier for industry to export goods and higher people (for the same reason: real wages are lower, i.e., the labor is cheaper) - which may actually help people to find a (better) job. However, what actually matters is sudden inflation, since stable inflation is usually compensated by proportional regular increases of wages, bank interest rates on savings, etc. May 20, 2022 at 11:08
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    @MishaP Another point I tried t make is that, the fact that the ruble remained stable, could be a) due to the inherent health of the economy, which quickly adjusted to the shock OR due to the timely intervention by the central bank, which accumulated necessary reserves (or due to both). So the fact that the ruble remained stable tells us little about whether Russian economy actually suffers from sanctions or not. May 20, 2022 at 11:10

You could argue that this is a "fake" exchange rate, but it seems like Russia keeps increasing the limit on foreign currency exchange, so citizens are indeed able to convert their rubles for dollars if they wish.

I would still argue that those limits don't mean a thing, and people are mostly unable to do what you suppose they are. Let me explain.

There's a huge lot of Russians, average to higher-than-average income, small businesses alike, who used to keep a modest amounts of bucks/euros in Russian banks just to protect their savings (operating surplus) from inflation. And now they're stuck with useless digits on their accounts. They are unable to cash out, since banks don't sell foreign cash anymore. They also can't casually open an account in a foreign bank, either because of sanctions or insanely high costs of travel and visas. (Yes, the only reliable way to open an account in a foreign bank for us is to travel abroad, and that's a huge feat for like 3/4 of Russians.) Exchanging currency without bank supervision is a crime. So people's life savings were effectively expropriated and added to the supply side of the Ruble exchange, while their demand was severed. Thus the abnormal rate.

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    >They are unable to cash in, since banks don't operate with foreign cash anymore. <--- False. The banks only stopped selling foreign cash. So if you have $$$ you can exchange them in banks for rubles. You only can't buy $$$ for rubles anymore.
    – Ilyich
    May 18, 2022 at 10:52
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    @Ilyich You're technically correct, but it also means that you have to sell your $$$ for half of its price. May 18, 2022 at 22:10
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    Probably you mean "they are unable to cash out", not "in". Russian banks now don't offer an option to receive non-rubles as cash when you withdraw money. You can sell your bucks to banks but can't expect anything but rubles from banks.
    – Vesper
    May 19, 2022 at 7:46
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    Does "bucks" specifically mean US dollars here?
    – phoog
    May 19, 2022 at 8:02
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    In my experience it can refer to any dollar (certainly the Canadian dollar, at least), but really it is just weird to hear it used in this context. It comes off as the wrong register, too casual, like reading an economic analysis of a country's "grub and threads" industries instead of "food and clothing." @Vesper I doubt that "bucks" would include euros given its use in the phrase "bucks/euros."
    – phoog
    May 19, 2022 at 10:45

Russian here. Please consider the fact that back in the March Central Bank of Russia made a statement of temporary law for the exporters of ANY kind of goods (oil, metals, supplies, vehicles, literally everything) to obligatory convert up to 80% of their foreign currency profit into roubles. That is a HUGE factor, even if citizens are able to convert their money into dollars. Companies are much bigger sector. Current exchange rate is surely artificial (I believe you should add up 30-45 roubles per dollar for a real one), but Russian Government creates all the circumstances for rouble to be overpowered, and to be honest they are great at this. There's a very little chance of long-term stability for our Economy, I think.

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    Another factor is that Russia now desired gas payments to be made in rubles, which also creates quite some level of demand outside Russia, which in turn contributes to high exchange rate for ruble.
    – Vesper
    May 19, 2022 at 7:44

While the exchange rate is not a good indicator of almost anything of practical importance (not only in Russia, but everywhere), surges in both directions ARE signs that something is wrong with the country's financial system or the economy.

A change of e.g. 5% in a day should indicate that a large amount of money ( in comparison to the whole economy ) changed hands.

What's worse, a movement of an exchange rate attracts speculants and their role is usually to confirm and deepen the initial movement.

When everything is normal, there are few entities capable of kicking the exchange rate by a large amount. On the other hand, if there are little activity (e.g. economy stall) a few moderate-sized deals can shift the rate by a large amount.

And, in regard to Rouble in particular, right now there are great deal of restrictions on the currency trade. This is why we are unable to extract even this partial knowledge out of its market rate.

There is no real Rouble market right now, the rate is profoundly government-influenced and most of the government actions in regard to the Rouble are not publicly known.

  • The surge is due to the sanctions, which would be a major shock even for a healthy economy. May 17, 2022 at 12:22
  • The REAL sanctions (e.g. oil) happened later.
    – fraxinus
    May 17, 2022 at 12:25
  • Maybe the real sanctions were smaller than their expectation that was already baked in the prices/exchange rates.
    – alamar
    May 26, 2022 at 12:01

It would be if Russia was allowed to participate in regular trade.

But the current USR/RUB rate is heavily influenced by the fact that many Russian entities are under sanctions.

To get slightly poetic, this creates a "water, water everywhere, nor any drop to drink" situation. Russia is accumulating foreign currency, but it cannot spend it to buy what it needs.

If the sanctions are not removed, the economy will slowly get worse and then experience a sudden drop off.

Because Russia's economy is highly specialized, it depends on components purchased abroad. But they cannot be purchased abroad anymore.

For example, here's an example of a Moscow State University economics professor mentioning that this will have an effect on Russian

  • car repair
  • car manufacturing
  • aircraft maintenance

Sorry, it's a Russian-language interview. But if you are that interested in Russia, perhaps that's not an obstacle for you. Otherwise, you can get a translation by turning on "CC" and changing the "subtitles" setting to "English."

Here she specifically mentions that some manufacturing will shrink.

Further in the video, she also mentions that Russia's ability to plant 2023 harvest will depend on Russia's ability to buy seeds. And its ability to buy seeds will depend on "situation in Ukraine" (a euphemism which she uses for Russia's war against Ukraine, since she is subject to Russia's censorship laws).

Currently there are still stockpiles of components, seeds, etc.

But as time passes, the inability to purchase them will cause domestic production to either stop or to switch to make-shift local parts. Since make-shift parts are usually worse than parts produced by specialized manufacturing, the manufacturing using local parts (where they will be available) will be of worse quality.

This will mean less manufacturing overall and lower-quality manufacturing in most areas which remain. Those are not indicators of a stabilizing economy.

  • Can you explain which sectors of Russia's economy are highly specialized and require parts that cannot be made domestically?
    – JJJ
    May 19, 2022 at 8:19
  • @JJJ yes, but finding the references will take me some time.
    – wrod
    May 19, 2022 at 8:20
  • @JJJ I think I'll limit to this one reference. A Moscow State University economics professor giving an interview, on this very topic, seems like it should be enough.
    – wrod
    May 19, 2022 at 8:52
  • I'm still not sure why you expect a "sudden" drop-off instead of a "soft landing" scenario.
    – alamar
    May 19, 2022 at 9:01
  • @alamar when the stockpiles are exhausted everywhere (including the grey markets), it will put pressure on grey markets to purchase in larger quantities. And that will make them easier to find for those looking to enforce the sanctions. Larger purchases are easier to track.
    – wrod
    May 19, 2022 at 9:05

Russian Balance of Payments figures have improved since Western sanctions against Russia. Russia's current account surplus hit $58.2 billion in the first quarter of 2022 — a three-decade high.

Russia is an energy powerhouse, so even amid sanctions and boycotts, the country will still reap nearly $321 million from its energy exports in 2022 — 36% more than in 2021, Bloomberg Economics forecast in April. That's as oil prices have soared to 14-year highs this year amid fears of trade disruptions due to infrastructure damage and sanctions against Russia.

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    Except, having a huge surplus is not an "improvement". It's an imbalance. Flooding the economy with cash you can't (or just don't) use inflates the exchange rate but does little to help with real problems (like real-terms inflation).
    – Zeus
    May 18, 2022 at 8:49
  • That's correct, real-terms inflation is quite visible.
    – alamar
    May 19, 2022 at 6:16

Look what happened after the Crimean conflict in 2014 with RUB:

rouble surge after 2014

The west also imposed sanctions back then, and rouble would quickly start to fall, but then the government made the interventions and it stabilized for a little, but then reached new heights, and the trend kept going up.

It could be the same thing going on now. Or maybe it will all come back as it was before, because now the "Ukrainian question" is coming to a conclusion.

I, having some insight, really don't think that the Russian economy is going to "collapse", neither it will "prosper" of course, but it will just really change a lot, that's all needed to understand. There will be no more something that people are used to, but some other unpredictable things can appear, as it always did in the past.

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    How exactly has the "Ukrainian question" been "solved"? The war is still ongoing, is it not?
    – F1Krazy
    May 17, 2022 at 14:05
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    @F1Krazy I meant that the Open War, is in a way is a resolving of a cold conflict. I edited my answer a little bit
    – urmurmur
    May 17, 2022 at 14:17
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    @urmurmur I don't think the Ukraine/Russia conflict is anywhere near to resolving into anything most would recognize as a "cold war"
    – CGCampbell
    May 17, 2022 at 14:28
  • Comments are not for extended discussion - if you'd like to discuss the conflict in Ukraine civilly, there is a chatroom for this purpose here.
    – CDJB
    May 19, 2022 at 7:28
  • @CDJB the messages have not been moved. the last message in that room is from 2 days ago.
    – wrod
    May 19, 2022 at 7:30

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