Economic Outlook for the Russian Rouble

By Elena Fabrichnaya and Gleb Bryanski

MOSCOW (Reuters) – The Russian rouble is expected to trade around 100 per U.S. dollar at the beginning of 2025, gradually weakening to 108 by year-end, according to a Reuters poll of 10 economists.

In November, the rouble hit its lowest point in over 2-1/2 years due to new U.S. financial sanctions on Russia. However, it regained some value after the central bank intervened to support it.

Most analysts consider 100 to be the new equilibrium level against the dollar, as foreign trade transactions disrupted by sanctions stabilize, coupled with other supportive factors for the rouble.

Traditionally, the first quarter of the year is favorable for the rouble, given the decline in imports, overseas travel, and external debt payments.

Recently, the rouble dropped to 103.7 against the U.S. dollar following the central bank’s announcement to withdraw some support for the currency in the first week of 2025 after the New Year.

Economists predict that the central bank will maintain its benchmark interest rate at 21% throughout the first half of 2025 following a surprising decision to keep rates unchanged on December 20. Mikhail Vasilyev from Sovcombank stated, “We expect the central bank to keep the key rate at 21% at the meeting on February 14. Lending will likely continue to slow, in alignment with the regulator’s forecast for 2025.”

In efforts to combat inflation, currently forecasted at 9.8% for the year, Russia’s central bank has raised its key rate to the highest level in more than 20 years.

Estimations for GDP growth indicate 3.9% in 2024, slightly up from an earlier estimate of 3.8%. However, growth is expected to slow to 1.6% in 2025 due to the central bank’s monetary tightening.

By the end of next year, inflation is forecasted to drop to 6.6%, closer to the central bank’s target of 4%, which could allow for a reduction of the benchmark rate to 18% in the fourth quarter of 2025.