Experts analyzed the potential benefits and drawbacks for Russia`s financial system resulting from the global drop in the dollar`s value.
One of the major global financial developments last week was the sharp decline in the Dollar Index (DXY) against a basket of world currencies. This index dropped by over 10%, representing the most significant depreciation of the currency in the first half of the year in half a century, specifically since 1973 when the dollar`s value plunged by 15%, according to the Financial Times. The performance of the U.S. currency also marked its weakest six-month period since 2009. Why did the dollar weaken so sharply during Donald Trump`s second presidency, and how beneficial is this for the ruble?
It`s worth noting that the Dollar Index measures the value of the U.S. dollar relative to a basket of six major currencies: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc. It indicates how the dollar`s exchange rate changes when compared collectively to these currencies. If the index rises, the dollar is strengthening; if it falls, the dollar is weakening.
Given that the dollar has long been the leading global reserve currency, it`s no exaggeration to say that financiers, investors, and currency speculators worldwide closely monitor the state of the DXY.
The decline in the Dollar Index in 2025 could be attributed to multiple factors, including changes in monetary policy, inflation rates, geopolitical instability, and competition from other currencies. Donald Trump`s return to power also played a role, with his introduction of several changes to U.S. trade policy and conflict with the head of the Federal Reserve. The president`s imposition of strict tariffs on imports from most key trading partners triggered a mass sell-off of American assets.
What do Russian financiers think about the significant drop in the Dollar Index and its impact on the global and Russian currency markets? Vasily Girya, CEO of GIS Mining, identified the key reasons for the Dollar Index fall as the easing rhetoric from the U.S. Federal Reserve, expectations of a key rate cut in America, growing trade imbalances, and a decline in global investment demand for dollar assets. Furthermore, he added, «external political factors also exerted additional pressure on the dollar, primarily the uncertainty related to the Trump administration`s trade and geopolitical initiatives.»
However, the main question remains the impact of the Dollar Index drop on the Russian market and economy. A falling Dollar Index implies the weakening of the U.S. dollar relative to other currencies, including the ruble. A strengthening ruble due to the dollar`s decline will make imported goods cheaper for Russians, lowering prices for foreign products and services.
Spartak Sobolev, Head of Investment Strategy Research at Alfa-Forex, stated, «The weak dollar factor within the main global currency basket is also reflected in the ruble`s quotes, which appreciated against it by almost 25% in the first half of the year. This means a significant reduction in inflationary pressure from the import component and, consequently, the possibility for the Central Bank to lower the key rate faster.»
Thus, the strengthening ruble and weak dollar create conditions for a more comfortable reduction of the Central Bank`s key rate (the next meeting on this matter is scheduled for the end of July), which could support economic growth and decrease borrowing costs in the economy.
But the situation is not entirely straightforward. Russian exports, often tied to the dollar, become less profitable as the ruble strengthens, leading to lower revenues for exporters in rubles. This could reduce the competitiveness of Russian goods on the global market. «Russian exports lose revenue in a situation where the national currency appreciates, while interest in imports grows,» explained Spartak Sobolev.
Nevertheless, cheaper imports in dollar terms could soften inflationary risks and support consumption, according to Vasily Girya. «Retail and manufacturers with a high share of imported components will benefit,» the expert noted.
This implies that retailers (companies or stores selling goods directly to end customers) and manufacturers using a significant amount of imported components are in a better position than those relying entirely on domestic parts or production.
The situation cannot be called stable or unambiguous; the fall in the dollar`s exchange rate in the current geopolitical and economic climate carries a number of risks for the Russian economy, warned Vasily Girya. «The key risk for the ruble with a further dollar decline is the potential increase in pressure on export earnings. An overly strong ruble could hurt the competitiveness of domestic goods and complicate investments in raw material and energy-intensive sectors,» the expert believes.
Based on expert assessments, the fall in the Dollar Index is an ambivalent factor influencing the Russian economy. On one hand, the falling Dollar Index can affect the cost of goods Russia sells abroad, potentially reducing their sales volume and export revenues. Difficulties with exports can also hinder investment attraction in sectors like mining and energy production. On the other hand, the drop in the Dollar Index leads to the strengthening of the ruble, making imported goods cheaper and easing the burden on consumers.
