The Ruble Closed 2024 Above 100 to the Dollar: Reasons, Forecasts, and Implications
By the end of 2024, the exchange rate of the ruble closed for the first time in history above the 100 rubles per US dollar mark, demonstrating a significant weakening against major global currencies. What caused such a decline, what can we expect in 2025, and how will this impact the economy and the population — we analyze in this article.
2024 Year-End Summary: Ruble Exchange Rate Dynamics
The ruble weakened amidst a range of internal and external factors. According to the Central Bank of Russia, the national currency ended the year with the following indicators:
- US Dollar Exchange Rate: +13.4% (ruble depreciation).
- Euro Exchange Rate: +7%.
- Chinese Yuan Exchange Rate: +6.8%.
Main Causes of Ruble Depreciation
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Geopolitical Factors
The introduction of new US sanctions against Russia in November 2024 dealt a serious blow to the economy. The sanctions affected key sectors and restricted access to international financial markets. -
Decline in Export Revenues
Falling global prices for oil and gas, along with a reduction in their export, diminished the inflow of foreign currency into Russia. -
Monetary Policy
The Central Bank maintains the key interest rate at 21%, which curtails economic activity but does not stop capital outflows. -
Increase in Imports
The gradual recovery of demand for imported goods increased the need for foreign currency, putting additional pressure on the ruble.
Forecasts for 2025
Reuters
Forecasts the dollar exchange rate to be between 100 and 108 rubles by the end of 2025.
Ministry of Economic Development of the Russian Federation
Estimates the average annual ruble exchange rate in 2025 at 96.5 rubles per dollar.
Alternative Scenarios
Some experts suggest both further weakening of the ruble to 120 per dollar and strengthening below the 100 ruble mark in the event of improved economic and geopolitical conditions.
Implications for the Economy and Population
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Inflation
The depreciation of the ruble increases the cost of imported goods, leading to rising prices. This is particularly evident in food, household appliances, and pharmaceuticals. -
Household Incomes
The real purchasing power of citizens is decreasing. This is particularly felt by those whose income is pegged to the ruble while expenses are tied to foreign currencies. -
Business
Companies dealing with imported goods will face rising costs. This may lead to price increases for services and products, further impacting consumer demand.
What This Means for Investors and Businesses
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Asset Diversification
It is recommended to hold savings in various currencies and consider investments in precious metals. -
Revising Financial Strategies
Businesses should minimize dependence on imports and assess currency risks. -
Attention to News
Stay informed about Central Bank decisions and international events to timely adjust your strategies.
The year 2024 proved to be a year of challenges for the ruble and the Russian economy. Amidst sanctions, declining export revenues, and high interest rates, the ruble significantly weakened. In 2025, volatility in the currency market is expected to persist, making careful planning of financial and investment decisions crucial.
