Volatility in the Russian currency market increased several-fold in March

Volatility in the Russian currency market increased several-fold in March

The Ministry of Finance's postponed currency sales are neutral for the market in the long term.
Currency market volatility increased exponentially in March, according to the Bank of Russia's "Financial Market Risk Review" report. The range of fluctuations over the month was 10.6% for the yuan and 9.9% for the dollar, compared to 3.5% and 2.5%, respectively, in February, the central bank wrote.

The ruble weakened by 5.2% in March to 81.30 rubles per dollar and by 4.5% against the Chinese currency to 11.74 rubles per yuan. "The US dollar remained below the 2025 average (83.17 rubles), while the yuan remained slightly above the average (11.53 rubles)," the Central Bank notes. The Russian currency remained close to the 2025 average, the regulator adds. Overall, in March, exchange rates fluctuated within the ranges of 11.20–12.38 rubles per yuan and 77.17–84.84 rubles per dollar.

"The ruble's weakening occurred amid a decline in foreign currency sales by exporters and the suspension of the Russian Ministry of Finance's operations with National Welfare Fund funds under the budget rule (suspended until July 1, 2026)," the Central Bank's report states. The regulator notes that, due to current oil prices, "the volume of deferred foreign currency sales in March is roughly comparable to the volume of deferred purchases in April, which is neutral for the market." Oil prices rose from $44.59 per barrel in February to $77 per barrel in March, the Ministry of Economic Development reported, citing Argus data.

Disjointed dynamics

On March 30, the Ministry of Finance suspended foreign exchange market operations under the budget rule until July 1, 2026. The ministry explained that this was due to plans to change the cutoff price, increase the sustainability of public finances, and strengthen the country's financial system. Under Russia's 2026 budget rule, the cutoff price was set at $59 per barrel of Urals crude oil.

The ruble has shown uneven dynamics over the past few months. It began to weaken sharply on February 28, when the military conflict in the Middle East began. The war led to a blockade of the Strait of Hormuz, through which 15% of global oil exports and 20% of LNG are transported. At the start of the conflict, the official Central Bank exchange rate for the dollar was 77 rubles per dollar; by March 20, it had risen sharply by 10.2% to 84.84 rubles per dollar. After a local peak, the dollar began to decline: on April 9, the exchange rate was set at 78.3 rubles per dollar. The yuan exchange rate was 11.47 rubles. Nevertheless, on April 8, the US and Iran agreed to a two-week ceasefire and a partial opening of passage through the Strait of Hormuz under Iranian control. However, the Islamic Revolutionary Guard Corps declared a violation of the ceasefire, and Iran suspended shipping through the Strait of Hormuz.

Following the March 20th interest rate meeting, Bank of Russia Governor Elvira Nabiullina stated that the ruble's weakening was in line with business expectations, so there was no point in considering the additional inflationary effect when making the decision. Deputy Governor Alexey Zabotkin also noted that there is no trend toward a weakening of the Russian currency, but there are fluctuations.

Demand for foreign currency increased moderately last month, according to Central Bank data. Non-financial companies reduced their total foreign currency sales in March by 7% compared to February, reaching $14.9 billion, which is lower than the average monthly figure for the previous six months ($15.6 billion). Total demand for foreign currency from non-financial companies increased month-on-month from 0.8 trillion to 0.9 trillion rubles.

Individuals increased their net foreign currency purchases in March, reaching 65.2 billion rubles (compared to 13.9 billion rubles in February). However, this figure remained below the March of last year and the 2025 average (93 billion rubles). Overall, since the beginning of the year, individuals have purchased 32 billion rubles worth of foreign currency (due to net sales in January), while for the comparable periods of 2024 and 2025, they invested 464 billion and 207 billion rubles, respectively.

The Ministry of Economic Development expects the average annual dollar exchange rate to be 92.2 rubles in 2026, 95.8 rubles in 2027, and 100.1 rubles in 2028. The ministry is preparing to present an updated forecast in April. The average dollar exchange rate will be 84 rubles per dollar in 2026, 92.3 rubles per dollar in 2027, and 97.8 rubles per dollar in 2028, according to the Central Bank's March macroeconomic survey.

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