“2 rubles, monsieur”: what is a strong currency? And when will the West finally “rot away”?

What makes a currency truly strong, why the ruble sometimes falls and then suddenly “strengthens,” why the yuan does not replace the dollar, and why talk of the West’s collapse looks more like a political TV series than an investment plan?

A true investor thinks in dollars. Indeed, the US dollar is:

• the world’s main reserve currency, liquid and in demand
• a currency that can be transferred quickly and relatively cheaply to almost any point on the planet
• a currency in which you can open a bank deposit in almost any country
• a currency whose cash can buy almost anything almost anywhere, even where the US dollar is not officially in circulation
• the currency to which most stablecoins in the cryptocurrency market are linked
• a currency that even Vladimir Putin uses in his speech when discussing the growth of trade turnover between Russia and China with settlements in national currencies

At the same time, the dynamics of the Russian ruble against the dollar since the collapse of the USSR can be briefly described as follows: for a long time the exchange rate barely moves, then — bang — a sharp devaluation. That was the case during the 1998 default, during the US mortgage crisis in 2008, during the first sanctions of 2014–2015 related to the Crimea story, and at the start of the special military operation in 2022.

From September 1994 to May 2026, the ruble depreciated against the US dollar by an average of ~11.4% per year (at exchange rates of 2.25 and 71.49, respectively).

Over 32 years, the ruble “folded” 32 times.

But… recently the ruble has strengthened significantly twice, in a rather strange way. After its sharp depreciation in March 2022, the quote fell from 120–130 rubles per dollar to 50–55 within a few months. Then everything seemed to return to normal. However, at the end of 2024, the ruble began strengthening again: the exchange rate fell from 110 rubles to the 70–80 area, and now we once again see a “strong ruble” on exchange-office boards.

The narrative of “the decay” of Western economies has dominated the Russian media space since time immemorial — they say this was already the case back in the USSR. In the West, accordingly, they gladly tell the opposite story.

Let us leave politics to politicians. What interests me in this story is something else:

• what is a strong currency, in general?
• why do some currencies strengthen while others weaken?
• what characteristics must a currency have to be called strong?

These are the questions I will try to answer below.

China is the world’s factory. What about the yuan?

If we look at a currency as an ordinary commodity, the logic seems simple: a strong currency is one that is in higher demand. If the dollar is so strong, it means everyone buys everything in dollars while selling their own native money.

Fair enough. However, according to data from ChinaPower (CSIS), in 2023 China accounted for about 28% of global industrial production — more than the United States, Japan, and Germany combined. Everything is made there: from electronics and clothing to industrial equipment. To buy all these goods, people first need to exchange their currency for yuan.

At the same time, according to IMF data :

The picture in the foreign exchange market is the same: according to a survey by the Bank for International Settlements, the dollar is involved in about 89% of transactions, while the yuan still lags far behind the leading currencies by turnover.

So the matter is not only demand for goods and not only export volume. What strengthens a currency is not merely a flow of containers from ports, but something else.

But what exactly? Let us try to figure it out.

A strong currency is

A strong currency is one in which the world is ready not only to “receive change,” but also to “stash savings” and use as collateral. A currency that is trusted because there is a real and predictable system behind it: an economy, financial markets, laws, institutions.

Here are some of its criteria:

Stable purchasing power. A strong currency does not depreciate by 30–50% in a year even episodically. Moderate, predictable inflation, without chronic devaluations.

Wide use. A strong currency makes up a significant share of global central bank reserves and has high turnover in the global foreign exchange market.

A deep market for “risk-free” assets. Behind a strong currency stands a large, liquid market for government bonds that the whole world is ready to hold as collateral, keep as reserves, and buy and sell at any time of day.

Convertibility and the absence of strict capital controls. Money in a strong currency freely crosses national borders: a foreign investor can buy an asset, sell it, and take the money out without additional permits, quotas, or special regimes. This is a key condition for the trust of large capital.

Trust in the legal and political system. A strong currency is a derivative of strong institutions: an independent central bank, predictable courts, and legislation that protects property rights. The World Bank regularly publishes a Rule of Law index — countries with high scores are, as a rule, precisely those whose currencies and assets enjoy global trust.

By the sum of these criteria, the US dollar is currently closest to the “ideal” reserve currency. Not because it has no flaws — we will talk about those too. Simply: if not the US dollar, then what?

But the dollar has problems too, doesn’t it?

Still, it would be dishonest to say that the US dollar is an indestructible fortress: this currency does have problems, and quite serious ones.

The economy: debt that only keeps growing. At the end of the 2025 fiscal year, US government debt stood at ~$37.6 trillion — about 122% of the country’s GDP. The budget deficit in the same year was around $1.8 trillion. Frightening numbers.

However, strange as it may sound, this debt is also the foundation of the global financial system. US Treasury securities are the world’s largest market for “risk-free” assets. Central banks use Treasuries as reserves, commercial banks use them as collateral, and pension funds use them as the foundation of their investment portfolios.

The paradox is that if US debt were sharply reduced, the global financial system would simply run out of reliable assets. High US government debt is both a risk and a side effect of the dollar’s global role.

Geopolitics: the money was simply frozen. In 2022, G7 countries froze about $300 billion of the Bank of Russia’s foreign exchange reserves. For many countries this became a warning signal: “what if tomorrow they freeze ours too?”

The reaction was predictable: central banks around the world began buying gold more actively. According to data from the World Gold Council, from 2022 to 2024 central banks bought more than 1 000 tonnes of gold annually — roughly twice as much as the average over the previous decade. Some countries became more cautious about assets in dollars and euros.

But the numbers show no mass “flight from the dollar”: the US dollar’s share of global central bank reserves has indeed declined from ~70% in the early 2000s to ~57% today, but this movement has been slow, gradual, and has been going on for years.

China is reducing its holdings of US government debt. A storyline that appears regularly in the news. Yes, China has indeed been consistently reducing its investments in Treasuries: according to data from the US Treasury, by mid-2025 China’s holdings had fallen to 2008 levels — roughly $730 billion (from a peak of about $1.3 trillion). Sounds alarming.

But “nature abhors a vacuum”: according to the same data, total foreign investment in US government bonds reached a historical record of $9.16 trillion in the summer of 2025. The buyers are Japanese, British, and European investors and funds. They are picking up what China is selling. This is neither good nor bad. This is how markets work. Simply because there is still no alternative asset of comparable scale.

The dollar really does have weak points:

• rising government debt
• budget deficit
• political risks
• undermined trust among some countries after the freezing of Russian reserves

But…

For the dollar to lose its status as the main reserve currency, criticism of it is not enough — there needs to be a competitor capable of offering a safe-asset market of comparable scale, an open financial system, and predictable institutions of power.

At the moment, there is no such competitor. And so the world continues to use the dollar. Not out of great love for it, but for lack of an equivalent replacement.

Then why is the ruble strengthening?

We have figured out what makes a currency strong. And, alas, the ruble meets none of the items on this list. So how can we explain what happened twice in recent years: a sharp depreciation of the ruble followed by an equally rapid rebound?

Let me remind you: in March 2022, the dollar went above 120–130 rubles, after which, literally within a few months, it returned to the 50–55 ruble zone. It sounded like a miracle. Russia’s Finance minister Anton Siluanov, in an interview with the NTV channel during SPIEF, barely holding back laughter, called the dollar toxic. Clients bombarded me with questions about whether it still made any sense to buy dollars at all. And people even came up with an anecdote . At the end of 2024, a similar story occurred: the exchange rate rolled back from 110 rubles per dollar to the 75–80 area.

Unfortunately, there was no miracle. The ruble strengthened for three very specific administrative and cyclical reasons.

It became much harder to buy dollars. In February–March 2022, Russian authorities introduced strict capital movement restrictions:

• a ban on transferring funds abroad
• the freezing of non-resident accounts
• mandatory sale of 80% of exporters’ foreign currency revenue

In other words, domestic demand for foreign currency was sharply restricted administratively, while supply was forcibly increased — and the exchange rate reversed. The market was simply closed.

Later, the requirements for repatriation and sale of foreign currency revenue changed several times — tightened or loosened depending on the exchange rate. And in May 2026, the government abolished this rule altogether, since the ruble had already “strengthened enough.”

Current account surplus: exports rose, imports collapsed. In the first months after sanctions were introduced, imports into Russia fell sharply. Some goods simply stopped arriving, some logistics chains broke down. At the same time, commodity exports — oil, gas, metals — continued. As a result, Russia’s current account surplus for the first four months of 2022 exceeded $95 billion — more than three times higher than in the same period a year earlier. More foreign currency comes in, less goes out — the exchange rate moves down.

The key rate: ruble deposits became attractive. In February 2022, the Bank of Russia sharply raised the key rate to 20%. In October 2024 — to 21%. For those whose money was inside the country, ruble deposits at 20%+ became much more interesting than converting into foreign currency. This reduced pressure on the exchange rate from inside the country: why buy dollars if a ruble deposit yields 20% per year?

Today, in May 2026, the ruble is being supported largely by:

• high oil prices — in April 2026, Brent rose almost to $125 per barrel amid escalation in the Middle East; now it is $110
• the still-high key rate — 14.5% against official inflation of 5.6% per year gives a positive real return on deposits and government bonds
• and expectations of a settlement of the conflict in Ukraine, linked to Russian-American negotiations

Most analysts speak of a gradual weakening of the ruble in the second half of 2026 as the regulator lowers the rate, oil prices fall, and imports recover.

Alas, none of this makes the ruble a strong currency. These are merely administrative measures and favorable market conditions that temporarily reduced the supply of foreign currency in the market and lowered domestic demand for it. Current conditions will change and, without a fundamental restructuring of the economy, the ruble will begin weakening again.

A strong currency does not work like that: its “strength” does not need to be supported by bans on capital outflows and mandatory conversion of export revenue. It is strong in itself; people use it voluntarily.

The ruble depreciates against everything. Well, almost.

Dollar, dollar, dollar… let’s see how the ruble exchange rate has changed against other foreign currencies that we encounter one way or another.

I took the official exchange rates of the Bank of Russia. From the list available on the website, I selected currencies whose quotes are available since February 2010. I divided them into three groups: reserve currencies, currencies of former USSR countries, and other. Missing data was supplemented from tradingview.com. In order not to anchor the result to any particular points on the chart, I calculated the expected dynamics as the geometric mean return.

The picture turned out to be less than rosy.

• Over a period of more than 16 years, the ruble lost value against 21 out of 27 foreign currencies.
• Among the currencies of former USSR countries, the Armenian dram looks surprisingly strongest: the ruble depreciates against the dram by an average of 5.8% per year. In this category, the ruble also loses to the new Turkmen manat, Moldovan leu, Georgian lari, Kyrgyz som, Azerbaijani manat, and Tajik somoni. Kazakhstan’s tenge, Ukraine’s hryvnia, Uzbekistan’s sum, and the Belarusian ruble have fared worse than the ruble.
• All 8 reserve currencies, without exception, are stronger than the ruble.
• The ruble looks best against the Turkish lira: it strengthens against it by an average of 14.3% per year.

All in all, the ruble behaves about the same as the Mongolian tugrik.

It turns out the issue is not the “treacherous dollar” at all. The ruble depreciates even against the “friendly” yuan and rupee. The reason is more likely in the very structure of the Russian economy: commodity dependence, chronic inflation, fiscal policy. This makes the ruble fundamentally weak, not the victim of “someone’s conspiracy.”

When my clients and I build a capital structure, the currency of expenses and the currency of savings are always different things. Here is how it looks in practice.

The ruble formula: can the dollar cost 30? What about 200?

Economists offer several approaches. The best-known is absolute purchasing power parity . The logic is simple: if the same basket of goods costs 1 000 rubles in Russia and 10 dollars in the US, the “fair” exchange rate is 100 rubles per dollar. The IMF and OECD regularly calculate PPP exchange rates for all countries of the world. The current value for the Russian ruble is 29.58.

The same idea, only in a playful form, is implemented by The Economist’s Big Mac Index : prices of the same burger are compared around the world. According to the index, in 2021 the ruble was undervalued by about 60%: one dollar cost 74 rubles instead of the proper 30.

There is another version of PPP theory — relative PPP. The formula is:

Let us apply it to our case. In September 1994, the consumer price index in Russia was 2.3; in April 2026, it was 297.2, meaning prices grew 129.2 times over the period. In the US — 2.2 times. In September 1994, 1 dollar bought 2.25 rubles. Therefore:

So there is the range: from 30 to 130 rubles. What to believe, everyone decides for themselves. Unfortunately, economists do not have a more precise answer for you and me.

Can the dollar actually be at 30? Theoretically, yes. If Russia lives in a world without sanctions and currency restrictions, with a transparent and open system of public administration. Here is what would need to happen.

• The lifting of sanctions and the return of foreign capital. At the moment, foreign investors cannot freely enter the Russian market and exit it. A full removal of restrictions could trigger significant interest in ruble assets. The exchange rate would be determined by real demand, not administrative measures.
• Sustainable trust in the legal system and the central bank. Investors — both foreign and Russian — must believe that the rules of the game will not change tomorrow.
• Diversification of the economy. A lower commodity share in exports reduces the influence of oil prices on the exchange rate.

And the dollar at 200 — is that possible? Yes, but this scenario requires several shocks to overlap at once:

• A sharp fall in oil revenues. A collapse in oil prices below $40–50 alongside a simultaneous reduction in export volumes.
• Even more sanctions. Secondary sanctions (or, apparently, tertiary ones by now), the closure of the remaining settlement channels, a complete disconnection of Russian banks from SWIFT.
• Loss of trust in the ruble inside the country. The population massively rejects deposits and cash in favor of physical gold, real estate, and other “hard” assets.
• The central bank fails or is unable to react in time. Political pressure on the Bank of Russia prevents it from properly adjusting the key rate or using reserves.

In 2022, all these elements were present to one degree or another, and the exchange rate flew to 130. However, the central bank acted quickly then, and exports did not stop. For the “dollar at 200” scenario, these factors would need to affect the economy for longer than a few weeks.

The most likely scenario is inertia. Without a structural improvement in the Russian economy, the ruble will, by habit, continue losing 5–8% per year against hard currencies. Roughly as it has done over the past 20 years: sometimes smoothly, sometimes in jumps. At this pace:

• in 10 years the dollar will reach 140 rubles
• in 20 years it will cost around 250 rubles

Uncomfortable, but what can one do? The economy will continue functioning, wages will be indexed, and life will go on as usual.

If the dollar does collapse — what then?

Tuesday, 4:35 in the morning, somewhere in the Russian hinterland. The silence is torn apart by a deafening roar — as if the earth itself has shuddered. The light bulb in the chandelier flickers nervously.

Vasily Petrovich, wearing only his pajamas, jumps out of bed, his heart pounding wildly. His phone vibrates nonstop: hundreds of notifications pour in like an avalanche, the screen flashing alarming red alerts. He squints in the half-darkness, trying to make out the lines: “oil — down 40%,” “euro — historical high,” “trading halted… worldwide,” “banks in India and Germany — panic.” Before his eyes, like frames from an old movie, flash his mortgage, savings, and vacation plans.

Another roar — closer now. Shouts in the street; someone is ringing a bell.

Vasily Petrovich freezes. Only one thought remains in his head, icy and merciless: surely… the dollar has collapsed?

Stop. Cut.

Now seriously.

Of course, the dollar’s status as the world’s main reserve currency is not a natural law. Here is a brief chronology of changing “hegemons”:

• 17th–18th centuries: the Dutch guilder. Amsterdam was the financial center of Europe: trade flourished there and government bonds were issued.
• 19th century: the British pound sterling. The British Empire controlled colonies and trade routes, London became the “banker of the world,” and the gold standard underpinned trust in the currency.
• 20th century: the gradual rise of the dollar. The United States became the largest industrial economy and creditor. The First World War weakened Britain’s position, and by the mid-1920s the dollar had already overtaken the pound by share in central bank reserves. The Bretton Woods Conference of 1944 merely legally formalized the existing state of affairs: the dollar became the center of the fixed exchange rate system and the only currency formally linked to gold.

Notably, these transitions were not abrupt. For example, in the 1920s–1930s, many countries held reserves in both pounds and dollars — the currencies coexisted for decades.

What we are observing today is an analogous process, a slow erosion of the dollar:

• central banks are diversifying reserves
• trading blocs are expanding the use of their own currencies
• gold is experiencing a new wave of popularity

A change in the main reserve currency is not an “explosion,” but an evolution, a consequence of a shift in the center of real economic power.

The world is too tied to the dollar to let it collapse overnight. If “the ship is sinking,” everyone has an incentive to “repair” it rather than create additional holes.

What an investor should do

We have done a lot of work: plunged into history, conquered formulas, and conducted thought experiments! Time to pull it all together. Here is a list of questions worth asking about any currency before trusting it with your savings.

What underlies this currency? A powerful, diversified economy with strong industry and a developed services sector — or a single product that rises and falls with commodity prices? Size matters, but diversification matters too.

How does inflation behave over a long horizon? Not “this week,” but over 10–20 years. If prices consistently rise faster than in trading partners, the currency will depreciate. This is not politics — it is arithmetic.

Is there a large and liquid government debt market? A true reserve currency is not just “money.” It is a currency in which one can buy a safe asset. One that is used as collateral, held in reserves, and sold at any time at a price close to market.

Can capital be freely brought into the country and taken out? If transactions with a foreign account require permission from the regulator, this is not a market currency, but an administratively managed one. Such currencies are not trusted.

What is this currency’s share in global reserves and settlements? The dollar is ~57% of reserves and ~89% of transactions in the Forex market. This is not an advertisement for the dollar, just statistics.

The ruble is our everyday currency: in it we pay for housing and groceries, and pay taxes. This is its legitimate and indisputable role. But the ruble is hardly suitable for savings.

Despite all the discussions about de-dollarization, high US government debt, and the freezing of Russian reserves, the dollar and the euro still form the core of the global financial system. The yuan, dirham, franc, and other currencies are possible additions depending on your individual objectives and the geography of your operations.

The optimal strategy for most people is not to try to guess the next “financial hegemon,” but to consciously separate flows: keep expenses in the currency of your country of permanent residence, and diversify savings. The dollar is unlikely to collapse overnight, but there is also little reason to expect a sharp strengthening of the ruble in the foreseeable future.