Russian Rouble Projected to Stabilize Around 100 per US Dollar in Early 2025, Gradually Weakening to 108 by Year-End
MOSCOW – The Russian rouble is anticipated to hover around 100 against the US dollar at the commencement of 2025, before gradually depreciating to 108 by the year’s end, according to a Reuters poll of 10 economists. This projection comes after a turbulent period for the rouble, which plummeted to a two-and-a-half-year low in November due to fresh US financial sanctions. However, subsequent intervention by the Russian central bank helped the currency recoup some of its losses. Experts now view the 100-rouble-per-dollar mark as the new equilibrium, reflecting a stabilization of foreign trade transactions, albeit still disrupted by ongoing sanctions. Other supporting factors are also expected to contribute to the rouble’s relative stability.
The first quarter of 2025 is traditionally a favorable period for the rouble, as seasonal factors like reduced imports, overseas travel, and external debt payments typically bolster the currency. However, the central bank’s announcement to scale back its support for the rouble in the first working week of 2025, following the New Year break, sent the currency tumbling to 103.7 against the dollar on Friday. This move signals a shift in the central bank’s strategy and introduces a degree of uncertainty into the rouble’s near-term trajectory.
The central bank’s benchmark interest rate is expected to remain at 21% throughout the first half of 2025, a decision that surprised markets in December. This hawkish stance is aimed at curbing inflation, projected to reach 9.8% this year, and mitigating economic overheating fueled by substantial government spending. Analysts believe the sustained high interest rate will further slow lending, aligning with the regulator’s forecast for 2025. This policy reflects the central bank’s commitment to maintaining price stability despite the challenges posed by sanctions and geopolitical uncertainties.
The Russian economy is expected to experience robust growth of 3.9% in 2024, marginally exceeding earlier projections. However, this growth is forecast to decelerate sharply to 1.6% in 2025, primarily due to the central bank’s tight monetary policy. This slowdown underscores the trade-off between controlling inflation and stimulating economic expansion. The central bank’s prioritization of price stability indicates a willingness to accept slower growth in the short term to achieve longer-term economic stability.
Inflation is expected to gradually decline to 6.6% towards the end of 2025, approaching the central bank’s target of 4%. This projected easing of inflationary pressures is expected to create room for the central bank to reduce its benchmark interest rate to 18% in the fourth quarter of 2025. This eventual loosening of monetary policy will likely be welcomed by businesses and consumers, offering some relief from the high borrowing costs that have characterized the current economic climate.
The Russian economy faces a complex and evolving landscape, navigating the ongoing impacts of sanctions, geopolitical tensions, and internal economic challenges. The rouble’s projected trajectory reflects these uncertainties, balancing factors that both support and weaken the currency. The central bank’s commitment to maintaining price stability, even at the cost of slower economic growth, underscores the delicate balancing act required to steer the Russian economy through these turbulent times. The forecast for a gradual weakening of the rouble against the dollar throughout 2025 suggests that the Russian economy will continue to face headwinds, and the central bank’s policies will play a crucial role in determining the extent of these challenges.
