Trump’s Overtures to Russia Make Ruble Year’s Star Performer

(Bloomberg) -- Russia’s currency has gained against the dollar amid a dramatic shift in US policy toward Vladimir Putin in the early days of Donald Trump’s administration.

The ruble has strengthened 13% versus the greenback since the beginning of the year, making it the best performing currency in the emerging market universe, data from the Bank of Russia and Bloomberg show. The central bank set the ruble’s official exchange rate at 88.51 to the dollar for Friday, the strongest since August. 

“The successful start of negotiations between Russia and the US, as well as strong comments from Trump, allow the market to keep positive expectations,” said Denis Popov, an analyst at Promsvyazbank PJSC. He also said there was a chance the ruble could strengthen further in the short or medium term.  

Senior officials from the US and Russia met Tuesday in Saudi Arabia’s capital, Riyadh, for talks on ending the war in Ukraine and the possibility of broader cooperation, signaling Trump’s desire to reboot a battered relationship. On Wednesday, the US leader intensified pressure on Ukraine’s president, Volodymyr Zelenskiy, saying he had “better move fast” to reach a deal with Russia “or he is not going to have a country left.”

Still, the ruble’s jump may prove premature without an early breakthrough in Ukraine peace talks, according to Bloomberg Economics. 

“If the geopolitical situation ultimately doesn’t change, then, according to our estimates, a fair exchange-rate level at current oil prices will remain” above 100 to the dollar, said Oleg Kuzmin, the head of research at Renaissance Capital. 

(Updates with Friday exchange rate in second paragraph.)

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