Russian ruble strengthens against euro amid soaring inflation

Ruble recovers against euro: from 76 to 64 in weeks

On May 20, the euro traded at 64 rubles. Weeks earlier, when tracking began, it stood at 76. In between, a series of updates—72 on May 3, 70 on May 4, 69 on May 5, 67 on May 13—showed the Russian currency recovering against the euro just as half of Europe bet on its collapse, and the euro fell to two-decade lows against the dollar. A move exceeding 15% that has ceased to be mere market data to become an indicator of war.

From 76 to 64 rubles per euro: what sustains the rise

The explanation repeated by those backing Moscow does not rely on markets but on sovereignty. Russia is a sovereign nation and military superpower, allowing it to set rules others would find unacceptable: demanding payment in rubles for essential exports, pegging the currency to gold—one gram for 5,000 rubles—and forcing buyers to acquire rubles directly from the central bank, bypassing foreign exchange markets.

This supports the strong thesis: if Russia refuses euros or dollars for what the West needs, exchange rates set in London or New York matter little. The price is set by whoever holds the gas. This period’s scene includes another detail: ruble accounts peine to pay everything in rubles.

It sounds logical. Yet it is debatable.

Inflation at 17% and rates at 17%: the cost of the play

The other side of the picture doesn’t dispute the rise; it questions the cost. Annual Russian inflation accelerated in one week to 16.7%, the highest level since 2002. The comparison is stark: 17% inflation with 17% interest rates in Russia versus 8% inflation with near-zero rates in the Eurozone.

The counter-argument is textbook: better a real rate of 0% than a negative real rate of 8%. That Russia can raise money costs is an advantage, not a condemnation. The rebuttal is also standard and more uncomfortable: hiking rates to 17% is exactly what a central bank does when losing control of its currency, not when celebrating it. Underlying this is the figure put on the table: about 15 points of purchasing power gained in Russia versus the same number, but negative, for European citizens.

Can a Russian citizen benefit from the ruble’s rise?

No, practically speaking, according to arguments made online. Revaluation boosts theoretical purchasing power for ruble holders, but capital controls approved by Moscow prevent ordinary citizens from acquiring euros. Some joke that a 5-ruble note is worth less than 5 euro cents: if the rate holds, average Russians could buy cheaper... provided they don’t try to leave their own market.

According to this view, only institutional investors—especially large British and US funds operating in rubles since day one—can arbitrage between currencies. Exchange rate profits, if any, are captured far from Moscow. Operational details confirm this: Westerners trying to buy rubles found the USD-RUB pair blocked by brokers, an market closed status coexisting without shame with an official rate published every morning.

The ruble was already sunk: the fine print of 2014

Here lies the nuance dampening euphoria. The ruble began bleeding in 2014 when sanctions left it trembling, and much of the current movement is a rebound from a very deep floor. Measuring a few weeks’ rise without this perspective confuses a local peak with a trend, it is argued. Some calculate: going from earning one euro a month to two is a 200% increase but remains perversos.

Warning signs appeared early. By August, the dollar traded above 96 rubles, far from the 66 seen in early May. Those seeing 64 as structural victory received their first correction there.

The argument that always wins: cheap ruble, expensive ruble

A dilemma summarizes the tone. If the ruble is cheap, Russian industry exports at unbeatable prices. If it is expensive, Russia buys abroad cheaper. In both cases, the conclusion is identical. This logic applies equally to the reverse narrative: no one conceives a scenario where the move fails.

This scheme has obvious falsifiability issues but explains why exchange rates became the battlefield where each side places its marker. It also shows why the debate shifted: not who is winning the war, but who bears the bill worse.

Russia owes €1,772 per capita; Spain, €32,375

Debt is where comparisons sting. Circulating figures are blunt: Russia accumulates €255,488 million in public debt across 144.1 million inhabitants, yielding €1,772 per head. Spain totals €1,533,000 million among 47.35 million people: €32,375 per person. An odd way to distribute the "poor country" label.

The counterpoint trinc quickly and is equally harsh: debt matters greatly when the ECB stops buying sovereign bonds. The warning cites Greek precedents and apocalyptic tones regarding future generations.

Other data: US GDP negative and European rates lack room

While debating the ruble, attention shifts to the world’s largest economy: US GDP fell -1.4% last quarter against expected +1.1%, with 8% annual inflation and near-zero rates. The term used is stagflation of horse proportions.

In the Eurozone, the ECB had announced hikes still unexecuted, and the EURIBOR—the rate banks lend to each other—traded at rock bottom. Shoppers checking groceries, fuel, and electricity bills need no translation of this data.

The uncomfortable question remains. If the Russian central bank was forced to raise rates from 8.5% to 12%, classic medicine against devaluation, why celebrate a currency whose issuer tightens belts to prevent collapse?