Russian-Ukrainian direct negotiations restart, ruble hits two-year high against the US dollar

The Zhitong Finance App learned that the exchange rate of the Russian ruble against the US dollar rose to the highest level in two years because Russian negotiators arrived in Turkey. It is expected that this will be the first direct negotiation between Moscow and Kyiv since 2022, while domestic demand for foreign currency in Russia has declined. According to data from the Bank of Russia, the ruble climbed to 80.2237 rubles per dollar in the local market, the highest level since May 31, 2023. In the global OTC market, the ruble rose by more than 40% this year, surpassing gold, making it the best performing asset.

The ruble has been boosted this year as US President Trump seeks an end to this war and people are optimistic that the Russian-Ukrainian war may end. The Bank of Russia said in a report on Wednesday evening that there are also signs that domestic demand for foreign currency is slowing down. Since the US sanctioned the Moscow Exchange in June of last year, the Bank of Russia has been using interbank transactions to calculate exchange rates no longer using the US dollar and the euro for transactions.

Russian President Vladimir Putin announced Wednesday evening that the Kremlin will send a team of experienced technical experts to participate in negotiations with Ukraine expected to be held in Istanbul today. US President Trump and Russian President Putin will not attend what may be the first direct peace talks between Moscow and Kyiv in three years to be held on Thursday. The Kremlin said the delegation would include presidential adviser Vladimir Medinsky (Vladimir Medinsky) and Deputy Defense Minister Alexander Fomin (Alexander Fomin). In the last round of negotiations, Mechinsky led a Russian delegation to participate in the negotiations. The negotiations broke down as the parties blamed each other over a draft agreement proposed by Russia.

The Bank of Russia said that in addition to expectations for an improvement in the geopolitical situation, stable money supply from exporters and high interest rates also supported the rise in the exchange rate. The Bank of Russia kept the benchmark interest rate at a record high in order to curb inflation, creating a favorable environment for arbitrage trading and local currency appreciation.

The Bank of Russia said in a report on Wednesday that Russia's demand for foreign exchange is gradually declining and has fallen to the lowest level since the Moscow Exchange was sanctioned and trading in the US dollar and euro was suspended. According to the Bank of Russia, despite the sharp drop in oil prices, export-related foreign currency sales fell by only 2%, which indicates that exporters are still exchanging revenue into rubles at a steady rate.