The kremlin Is Preparing to Strip “kremlin Patriots” of Their Wealth Once and for All

The central bank of russia is consistently encouraging russians to get rid of their foreign currency savings and switch to ruble deposits. To this end, it is employing a whole arsenal of measures: inflated bank offers on ruble deposits, prohibitive fees on foreign currency purchases, problems with international transfers, and the virtual absence of returns on foreign currency deposits (only up to 4.5% per annum in US dollars and up to 4% in euros). While just 10 years ago, the share of russians’ foreign-currency savings in banks stood at over 26%, in the first quarter of this year it fell to a record low of 4.9%.

In the current quarter, the russian ruble has shown an unusual strengthening trend against the US dollar. Since early April, the ruble has gained at least 12% and is currently trading at approximately 70 rubles per dollar. The artificial strengthening of the national currency was driven by the central bank’s extremely high discount rate, a temporary rise in oil prices amid events in the Middle East, and forced currency sales by exporters. This exchange rate has become a source of pride for “kremlin patriots” and an illusory opportunity to make a profit on ruble deposits, with interest rates on some reaching 22%.

However, this “triumph” is likely to turn into a financial disaster. In just the first four months, the rf’s budget deficit reached nearly 6 trillion rubles, even though it was projected to be 3.77 trillion for the entire year. Due to the strengthening of the ruble and the impact of international and Ukrainian sanctions, the kremlin cannot plug the hole in the treasury even despite high global oil prices. According to economists’ calculations, for every 5 rubles in the exchange rate, the budget loses 700–800 billion rubles in oil revenue. The shortfall from this factor alone could amount to about 1.7 trillion rubles by the end of the year.

Please, be reminded: the ministry of economic development of the rf projected an average annual exchange rate of 92.2 rubles per dollar for the 2026 state budget, while independent experts predicted over 100 rubles. Add to this the deep-seated problems in other sectors of the russian economy.

Given the colossal and ever-growing costs of the war against Ukraine, the russian government will have to urgently seek ways to rescue the budget in the coming months. Since the “victory” over citizens’ foreign currency savings has already been achieved, a sharp adjustment of the exchange rate to target levels is inevitable. Thus, the latest cause for celebration among “kremlin patriots” risks turning into a massive loss of savings overnight and their being left with a pile of national currency on their hands as a memento.