Russia's widening budget strain and sanctions put ruble's top performance at risk

Russia's ruble has surged about 45% against the dollar since early last year and recently traded near 78 per dollar, but that strength is emerging alongside a deepening budget squeeze. The government held its 2025 deficit at 2.6% of GDP by cutting December spending 19% as oil and gas income fell to a five‑year low and annual energy revenue dropped 24%, while sanctions and high rates forced the Finance Ministry to boost daily foreign‑exchange sales. Despite heavy intervention and tighter policy, economic growth likely slipped below 1%, and analysts expect the ruble could weaken again over the next year.