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Russia's economy is struggling due to ongoing war and sanctions, but the ruble remains one of the strongest currencies globally. The budget deficit for this year is twice as large as initially anticipated and will persist in the years to come. Sanctions have led the state to miss out on trillions of rubles. Nonetheless, the ruble has strengthened against the dollar and euro in recent months, ranking among the world's top currencies in 2026. Despite these challenges, the ruble hasn't been heavily affected. So, why is this the case?

The current problems are not among the primary factors impacting the exchange rate. Instead, factors such as balance of supply and demand drive the ruble's movements over several months, changing relatively slowly. In October, the main contributors to the ruble's strengthening were businesses purchasing rubles for quarterly tax payments and news of negotiations between Russia, the United States, and Ukraine to end the war.

These developments, though not definitive, indicate hope for a compromise between Washington and Moscow.

However, the situation shifted in early November when Republicans' defeat in the midterm congressional elections weakened Donald Trump's position and his chances of facilitating peace. Also, oil prices have fallen due to reduced risk of escalation in the Middle East conflict, another current factor influencing the ruble.

Despite these temporary conditions, sharp swings in the exchange rate are absent, reflecting the significant changes in Russia's currency market since the onset of the war. Before 2022, any new sanctions or negative rhetoric from Western leaders could trigger a significant drop in the ruble. Now, fewer investors are in the market as foreign players have left due to the tough sanctions.

Additionally, the toughest sanctions have already been implemented, so each new set of restrictions no longer surprises the economy or Russian businesses.

The main fundamental factor influencing the ruble's exchange rate is the restructuring of Russian trade due to the war. Before 2022, dollars and euros entered the country primarily through oil and gas exports, with businesses creating steady demand. Nowadays, Russia trades oil and gas mainly with Asian countries, earning currency from that trade.

The war in the Middle East has helped the Kremlin by driving up commodity prices. However, Ukrainian strikes on oil refineries, ports, and shadow fleet tankers have dampened revenues. Nevertheless, Russia has managed to generate income. Imports haven't fully recovered since 2022, and China has become Russia's primary trading partner, allowing settlements in yuan.

Consequently, Russia no longer requires dollars and euros in the same volumes it did before the war, resulting in a currency overhang that strengthens the ruble. This balance has prevailed since mid-2022, and few factors could disrupt it. Potential disruptions could include a collapse in commodity prices, effective secondary sanctions against oil buyers forcing them to abandon trade, or a rise in imports.