Why the Ruble Is Strengthening

Since the beginning of 2025, the exchange rate of the ruble to the sum in Uzbekistan has increased from 126.51 to 153.22. Notably, the ruble strengthened significantly in March. This increase has improved the ruble’s value not only against the sum but also against the US dollar. According to experts interviewed by Kursiv Uzbekistan, this situation may lead to higher prices for goods imported from the Russian Federation, while families of migrant workers in Uzbekistan may benefit from receiving more money. However, experts caution that this trend might be temporary.

Reasons for ruble strengthening

The recent strengthening of the Ruble can be attributed to several positive factors, as highlighted by Farhod Murodov, Senior Investment Banking Specialist at ALKES. Key among these are steady export revenues, a prudent monetary policy implemented by Russia’s Central Bank, and a notable decrease in foreign currency demand. Murodov also pointed out that «positive geopolitical signals have fostered a more favourable outlook among investors.»The ruble will hit prices in Uzbekistan / Photo: Pexels.com

Investment analyst Muhammadkamron Murodov from Freedom Broker noted that these positive signals largely reflect hopes for a peaceful resolution to the Ukraine conflict. This renewed optimism has ignited interest from foreign investors, making Russian assets appear increasingly attractive amid expectations of easing sanctions.

«Since early 2025, the Russian ruble has appreciated significantly against the dollar, moving from 101 to 85 rubles per dollar by mid-March,» he mentioned. As of March 20, 2025, the Ruble was trading at around 83 per dollar, as reported by the Central Bank of Russia.

Murodov emphasised that the Central Bank’s decision to maintain its key interest rate at 21% has played a crucial role in supporting the Ruble. This signals the bank’s commitment to a tight monetary policy to combat inflation, especially as Russia’s inflation rate hit 10.06% in February, well above the target of 4%.

Shodlik Nazarov, Senior Financial Analyst at Avesta Investment Group, added that seasonal factors have also positively influenced the Ruble’s rise.

«Typically, at the start of the year, imports decline following the New Year holidays, which reduces demand for foreign currency and temporarily strengthens the ruble,» he explained.

Russian exporters often convert foreign revenues into rubles during the first quarter to meet tax obligations, especially toward the end of March, creating a greater supply of foreign currency in the market and further bolstering the Ruble.

Impacts on prices in Uzbekistan

Experts note that the current ruble situation presents a dual impact on Uzbekistan’s economy.

Murodov explains, «A strong ruble is advantageous for Uzbek exporters, making their goods more competitive in the Russian market.»

Export-oriented businesses stand to enhance their revenues, which could significantly benefit the local economy. As demand for Uzbek products like agricultural goods, textiles, and food increases in Russia, exporters will also gain from favourable currency conversion rates, translating stronger ruble payments into higher earnings in soums.

However, there are some concerns regarding rising costs for Uzbek consumers. Nazarov warned that as Russian goods become more expensive, this could impact a wide range of imports, from food items to household appliances, increasing costs for local businesses reliant on these supplies. This aspect could contribute to domestic inflation and lower consumer purchasing power.

The effect of the exchange rate on migrant workers

Russia is a primary source of remittances for Uzbekistan, and the strength of the Ruble is pivotal. Muhammadkamron Murodov reported that in 2024, 77% of all remittances — amounting to $11.5 bn — originated from Russia. A stronger ruble enhances the value of these transfers when exchanged for soums, improving household incomes and bolstering domestic consumer demand.

«Hundreds of thousands of Uzbeks working in Russia are sending money home, and the strengthened ruble has significantly increased these amounts,» shared Murodov from ALKES.

Nazarov added that this inflow of funds is vital in supporting retail trade and the service sector within Uzbekistan.

Future Outlook for the Ruble

Looking ahead, analysts are cautious about potential challenges. Murodov noted projections of the Russian economy slowing to 1.2% growth in 2025, as outlined by the Central Bank of Russia. This could dampen demand for Uzbek exports and limit employment opportunities for migrant workers.

He expressed scepticism about the sustainability of the Ruble’s current strength, suggesting that «In the coming months, the Ruble may weaken to a range of 90–95 per dollar due to declining export revenues, rising imports, and increased demand for foreign currency. A decrease in oil prices could also exert pressure on the Russian budget and widen the deficit.»

Future movements will likely hinge on decisions made by Russia’s central bank, particularly in light of their upcoming rate meeting on March 21 and broader geopolitical developments.

Nazarov echoed Murodov’s sentiments, indicating that the long-term fundamentals for continued ruble growth are not particularly robust.

«The sustainability of this trend will depend on various influences—including geopolitical factors, Russia’s economic performance, and central bank policies. As the Ruble gradually weakens, the positive effects we see today may recede,» he concluded.