Currency swings: Why is the dollar rising globally while the ruble may strengthen?

On global markets, the U.S. currency is strengthening: rising Treasury yields and expectations that the Federal Reserve will maintain a tight monetary policy have supported the dollar, while on October 1 the euro fell to a roughly 17-month low of below $1.13. In Russia, however, the opposite movement took place: the Bank of Russia’s official exchange rate for October 1 saw the dollar fall from 84.43 to 83.56 rubles, the euro from 96.06 to 94.88 rubles, and the yuan from 12.58 to 12.47 rubles. In other words, a stronger dollar globally does not necessarily mean a weaker ruble at the same time.

At first glance, this seems contradictory. The conventional logic of the currency market suggests that higher U.S. interest rates and rising yields on American assets make the dollar more attractive. On September 16, the Federal Reserve did raise the federal funds rate target range by 0.25 percentage points, to 3.75–4% per year. In late September, rising U.S. bond yields provided additional support for the dollar, and on October 1 a sell-off in global bond markets pushed government bond yields in several of the world’s largest economies to multi-year highs.

But the ruble’s exchange rate is now determined somewhat differently than it was before 2022. The direct channel for international capital flows between Russian and Western financial markets has weakened substantially. As a result, changes in Federal Reserve or European Central Bank interest rates are no longer transmitted to the Russian currency market through portfolio investment flows as quickly as before. Today, the ruble is influenced much more by the balance between exporters’ foreign-currency earnings and importers’ demand for foreign currency, the trade balance, budget operations, the prices of Russian exports, and the infrastructure used for international trade settlements.

This is clearly illustrated by events in recent months. In July, the official dollar exchange rate was around 78 rubles; by early September, it had risen above 86 rubles. The Bank of Russia attributed the ruble’s summer weakening to a combination of subdued growth in physical export volumes and rising demand for imports, including to replenish inventories and supply petroleum products. At the same time, Russia continued to run a trade surplus: in July, it amounted to $13.6 billion, compared with $12.3 billion the previous month.

There is another important consideration. When we talk today about the “dollar exchange rate” or the “euro exchange rate” against the ruble, we are no longer referring to quite the same market that existed a few years ago. After exchange trading in dollars and euros was discontinued, the Bank of Russia began calculating the official dollar exchange rate using banks’ data on over-the-counter interbank transactions. And, as of June 8, 2026, the euro-to-ruble rate is determined using two exchange rates: the dollar-to-ruble rate and the euro-to-dollar rate published by the European Central Bank. As a result, changes in EUR/RUB may reflect both movements in the ruble itself and shifts in the euro-dollar exchange rate on global markets.

That is why looking at the dollar alone is becoming a less and less informative way to assess the ruble. The yuan has become much more important for Russia’s foreign trade, and businesses operating across different regions of the world now face several currency risks at once. For example, a stronger dollar against the euro may have little impact on a company paying a Chinese supplier in yuan, but it could significantly affect an importer of equipment priced in euros or dollars. Rather than a single “exchange rate,” businesses now face a system of cross rates, each of which can affect their costs differently.

For Russian exporters, an excessively strong ruble has a dual effect. It makes imported equipment and components cheaper, but at the same time reduces the ruble value of their foreign-currency export earnings. A weaker ruble has the opposite effect: it increases exporters’ ruble revenues, but makes foreign goods, equipment, logistics, and some imported intermediate goods more expensive. That is why it is especially important for companies today not to try to guess a single “correct” exchange rate, but to manage the currency mix of their receipts and payments and, where possible, align the currencies used in their contracts with the currencies of their expenses.

For households, the impact of exchange rates is not limited to the price of cash dollars, either. Changes in the ruble gradually feed through to the cost of overseas travel, imported electronics, cars, medicines, equipment, and goods made using foreign components. However, this pass-through is neither immediate nor one-to-one: companies may have old inventories, contracts agreed in advance, currency hedges, and varying shares of imported inputs in their costs. So a daily change of one or two percent in the official exchange rate does not necessarily mean consumer prices will move by the same amount.

The current situation highlights the key point: the ruble can increasingly no longer be explained by the simple formula “the dollar rises globally, so the ruble falls.” The dollar is currently supported on global markets by high U.S. yields and expectations about Federal Reserve policy, while in Russia the exchange rate is shaped simultaneously by trade flows, export earnings, imports, interest rates, and the mechanics of cross-border payments. To assess the ruble’s prospects, it is therefore necessary to look not only at the Federal Reserve and the dollar index, but also at the state of Russia’s trade balance and domestic demand for foreign currency. These factors now go a long way toward explaining why the ruble can move against the broader direction of global currency markets.

Author: Anna Gennadyevna Glebova, Doctor of Economics, Professor at the Department of World Economy and International Finance, Financial University under the Government of the Russian Federation.