Here’s a piece in the Kyiv Independent trying to solve the riddle of the ruble’s strengthening in 2025. The ruble has strengthened despite what Konstantin Sonin calls the “classic macroeconomic principles” that, in his view, should have made it weaker. The implied conclusion is familiar: if the ruble is strong while “fundamentals” look weak, then perhaps the ruble is simply “overvalued.”
But that framing already smuggles in a questionable assumption: that an exchange rate is a clean, market-generated signal reflecting some underlying “true” value. A Marxist perspective starts from the opposite end. Money is not a neutral yardstick that makes commodities comparable; it is the necessary form through which commodity values appear. As Marx puts it, money is the “phenomenal form” of value because commodities are commensurable as objectified social labour (labour-time). Once you take that seriously, an exchange rate is not just a price of “ruble versus dollar.” It is a shifting expression of how value is being realised, transferred, and constrained across the world market, inside a hierarchy of currencies and payment infrastructures.
That matters because the post-2022 sanctions regime did not merely “shock” Russia’s fundamentals. It re-plumbed the channels through which value is converted into money: what can be imported, how it can be paid for, which currencies clear trade, where export receipts can be held, and what instruments the state can use to intervene. Under those conditions, a strong ruble can reflect not an economic renaissance but a reconfigured mechanism of adjustment: import compression, redirected settlement into non-Western currencies, administrative and financial constraints on outflows, and a shift in the very benchmark through which “strength” is being observed.
From that vantage point, the real question is not “Is the ruble overvalued?” but: what has changed in the regime that links Russia’s production and trade to world money, and how are the costs of that adjustment distributed domestically and internationally?
What “classic fundamentals” miss in 2025
Sonin’s comment makes sense only if you grant the standard macro premise: that the exchange rate is a relatively clean market “price” translating export earnings, fiscal pressure, and risk premia into depreciation. But Russia’s FX market in 2025 isn’t a textbook object. Sanctions and policy have shifted adjustment away from the price (the exchange rate) and into quantities and constraints, while also changing the benchmark through which “strength” is observed. Three features matter.
First, import and settlement frictions compress FX demand: if firms cannot import smoothly or pay reliably, they simply do not demand as much foreign currency. Second, the benchmark problem: after exchange trading in USD/EUR was disrupted, RUB/USD became less transparent and more derived, while the liquid pair that matters most for pricing and hedging increasingly became RUB/CNY. Third, triangle arithmetic: with the yuan as the usable intervention currency, stabilizing RUB/CNY tends to transmit into RUB/USD through cross-rates and arbitrage. In short, the ruble can look strong against the dollar not because “fundamentals” improved, but because the trade-payment-financial regime changed how FX demand is formed and where price discovery happens.
Trade re-routing and currency substitution: why the dollar matters less
A further piece missing from the “fundamentals” framing is simple: Russia increasingly needs fewer dollars to run its external trade. As trade reoriented toward China, India, Turkey, and intermediary hubs, a larger share of transactions shifted toward yuan, rubles, and local currencies, changing the composition of FX demand. Mechanically, (i) imports paid in CNY or routed through partner currencies reduce the need for USD as a funding currency; (ii) export receipts increasingly arrive in CNY (or are converted into CNY/RUB), changing the currency composition of FX supply; and (iii) settlement frictions and compliance risk raise the cost of using Western payment channels. The result is that a “strong ruble” can reflect reduced demand for foreign currency and altered clearing arrangements rather than renewed competitiveness. To judge whether the ruble is “overvalued,” the relevant benchmarks are trade-weighted measures and the ruble against settlement currencies (especially CNY), alongside import-price dynamics.
A Marxist lens sharpens the interpretation because the issue is not only whether the ruble is “overvalued,” but overvalued for whom, within what hierarchy of world money. De-dollarization does not abolish dependency; it reconfigures it. The question becomes whether Russia’s trade structure and price-setting power improved, or whether constraints simply changed address. That is an empirical claim, and the next section outlines how to measure it.
Empirical signatures of ruble strength in 2025
Two observable patterns stand out. First, the ruble appreciated broadly across counterpart currencies, not only against the dollar. Google Finance shows gains over the past year versus USD (~+29%), CNY (~+25%), INR (~+37%), and regional partner currencies such as KZT (~+26%) and KGS (~+28%) (Figure 1). These bilateral movements are not independent: exchange rates are linked by triangle pricing. Once the ruble strengthens in a liquid “anchor” leg (in Russia’s case increasingly RUB/CNY, with USD often a cross-rate reference), other ruble crosses tend to move in the same direction unless the third currency shifts sharply enough to offset it. The near-identical shapes across pairs therefore suggest a common driver transmitted through arbitrage and cross-rates, not multiple unrelated bilateral stories.
Second, the import data point to quantity adjustment that mechanically reduces FX demand. In 2025 Russia’s imports from key suppliers were materially lower than in 2024, especially from the dominant partner, China. For January–September, imports from China were about 12% lower year-on-year, with sharper declines from Turkey (−25%) and Kazakhstan (−18%), and a modest decline from EU27 (about −5%) (Figure 2). China also shows an unusually deep early-year trough (February 2025 far below February 2024), and imports remain below 2024 levels for much of the year. This pattern is consistent with a regime in which FX demand is compressed by trade and payment frictions: fewer imports and harder settlement reduce the need for foreign currency even if the real economy absorbs the adjustment through higher transaction costs, markups, and constrained availability.
Figure 2. Russia imports by partner, Jan-Sep 2025 vs. Jan-Sep 2024. Source: Bruegel Russian foreign trade tracker.
These two signatures set the empirical context for identifying the mechanisms that moved the anchor leg and sustained broad ruble strength under sanctions.
Decomposing the channels.
Once the “broad appreciation” fact is established, the second step is to decompose mechanisms into observable channels rather than debating abstract “fundamentals.” Three empirically testable drivers stand out. First, tight monetary conditions: very high ruble yields can support the currency and suppress import demand by raising borrowing costs, which reduces demand for foreign currency. Second, managed FX plumbing under sanctions: the central bank’s usable intervention instrument is the yuan, and Reuters explicitly notes CBR yuan sales to support the ruble, with ruble–yuan movements transmitting into ruble–dollar via arbitrage. Third, quantity adjustment through trade and payments frictions: the import compression documented in Figure 2 is the direct empirical signature of suppressed FX demand, consistent with adjustment occurring through quantities and transaction costs rather than a clean depreciation.
These mechanisms explain how the ruble can strengthen under sanctions without signalling renewed competitiveness. The remaining question is what this regime implies for Russia’s position in the world market, and how to measure that beyond exchange rates.
Operationalising the dependency claim
The dependency argument becomes empirically meaningful only when it is translated into measurable shifts in trade structure, pricing power, and value transfer, not simply into the rhetoric of “de-dollarization.” A simple operational proxy is the decomposition of bilateral balances by product type. Bruegel’s split for Russia–China (Figure 3) shows a persistent surplus in mineral fuels alongside a large deficit in non-fuel goods. In other words, Russia’s net position is sustained by benchmark-priced commodity exports, while dependence is revealed in the structural deficit on manufactured and technology-intensive imports. The settlement currency may change, but the trade hierarchy remains visible in the composition of flows.
Figure 3. Russia’s trade balance with China. Source: Bruegel Russian foreign trade tracker.
In our analysis of Russia’s peripheral accumulation regime (with Boris Kagarlitsky), the post-2022 shift is framed as a restructuring of external circuits rather than an exit from them: Russia’s earlier model is described as oligarchic/rentier capitalism shaped by peripheral integration, and the war period as a new, state-driven accumulation regime (“military Keynesianism”). Crucially for the “pivot East” debate, we argue (drawing on subsequent work using Minqi Li’s approach) that while redirection reduced the scale of net value transfers out of Russia, the transfers remain negative, with a growing share accruing to China as the central trading partner. Empirically, that pushes the analysis toward: (i) trade composition by partner and commodity; (ii) effective exchange rates and import-price indices; and (iii) indicators of price-setting power and intermediation margins (especially where sanctions reroute imports through hubs).
Conclusion
The 2025 “riddle” of the strong ruble dissolves once we stop treating RUB/USD as a neutral, self-explanatory signal and instead view the exchange rate as the outcome of a re-plumbed regime of trade, payments, and financial constraint. The evidence points to a broad-based ruble appreciation across major and regional counterpart currencies, with close co-movement consistent with triangle pricing and a yuan-centered market structure. That pattern is more compatible with compressed FX demand (import constraints and payment frictions), tight monetary conditions, restricted outflows, and managed intervention capacity than with a simple story of renewed growth or investor confidence.
This does not mean sanctions “helped” Russia in any developmental sense. It means the adjustment has been shifted away from a clean depreciation and into quantities and distribution: what looks like currency stability can coexist with higher transaction costs, intermediated trade margins, and pressure on domestic firms and households. From a Marxist/dependency perspective, de-dollarization is not delinking. The post-2022 stabilization is better understood as a relocation within a hierarchy of world money and trade circuits, where dependency and value transfer mechanisms persist but are reconfigured toward new nodes. The relevant question, therefore, is not whether the ruble is “overvalued” in the abstract, but whether Russia’s trade structure, technological position, and price-setting power have improved, or whether the constraints have simply changed address.