The Russian ruble weakened to 73 per dollar, retreating from its three‑year high of 70 reached in late May, as a worsening fiscal outlook temporarily outweighed support from capital controls and elevated energy prices. The Bank of Russia signaled that fiscal policy will be more accommodative than previously anticipated over the next three years, with the federal government expanding bond issuance to finance the costly war in Ukraine and to subsidize industries hit by Western sanctions since 2022.
This dimmed the ruble’s earlier gains, which had been bolstered by a surge in energy prices following the outbreak of war in the Middle East, prompting major energy importers to seek Russian supplies as an alternative. At the same time, successive rounds of sanctions and a slowdown in the domestic economy curbed Russian demand for imported goods, limiting purchases of foreign currency and thereby providing additional support to the ruble. Russia’s GDP shrank by 0.2% year-on-year in the first quarter.
