The Russian ruble has surged than any other major global currency this year, marking its strongest performance since 1994, according to Bloomberg calculations.

The nation’s currency has also become one of the world’s five highest-yielding major assets this year, trailing only precious metals – platinum, silver, palladium, and gold.

The ruble has risen 45% since the beginning of the year, trades near 78 per dollar and is approaching levels not seen since before the escalation of the Ukraine conflict in 2022, the outlet said on Wednesday.

The ruble’s strength has been linked to a steep decline in Russian demand for foreign currency amid Western sanctions, coupled with a stringent monetary policy that has enhanced the attractiveness of ruble-denominated assets for residents.

The central bank maintained a record high key interest rate for three years until December, when it was reduced by 5 percentage points to 16% as part of measures to curb inflation amid sweeping sanctions related to the Ukraine conflict.

The latest interest rate cut continues a shift from the emergency tightening that followed the restrictions, when the key rate jumped from 9.5% to 20% to stabilize the ruble. After easing and then tightening again amid renewed price pressures, the rate peaked at 21% in October 2024 before the bank began gradual cuts this year.

Support for the ruble has also come from the Bank of Russia’s foreign currency sales, reflecting the Finance Ministry’s management of yuan and gold from the National Wealth Fund to offset lost energy revenue, the outlet added.

The ruble’s growth this year ranks it among the top five most profitable global assets in terms of spot returns, following platinum, silver, palladium, and gold.

The official Russian exchange rates for the dollar and euro were historically determined by trading activity on the Moscow Exchange. However, in June 2024, formal exchange-based trading in these currencies was suspended due to Western sanctions targeting Russia’s financial infrastructure.

Since that suspension, the Bank of Russia has set the official ruble rates for the dollar and euro using commercial bank data. The central bank’s methodology is based on the results of over-the-counter interbank foreign exchange transactions.