If you expand the cross-asset leaderboard to include a wide range of commodities and currencies (as opposed to just gold, oil and G10 FX along with bonds, credit and major equity benchmarks), the top four spots are all occupied by precious metals.

Platinum’s up 150% in 2025, silver 140% and palladium’s roughly doubled. Next is gold’s ~70% gain, the best since 1979.

Can you guess what occupies the number five spot on the list of best-performing assets? If you said Vladimir Putin’s ruble, you win a set of Matryoshka. (Check them for listening devices and make sure their eyes aren’t moving.)

There’s the chart. Pretty good for the currency of a pariah state whose main export (energy) is under draconian international sanctions.

Ironically, the sanctions are a contributor to the ruble’s strength. The sweeping nature of the penalties and restrictions forced Russia to settle more and more trade in rubles. Tellingly, the Kremlin scrapped a mandatory repatriation requirement for exporters in August after foreign currency sales dwindled despite very high conversion rates.

Because foreign companies are less willing (or unable) to sell goods into the Russian market, local importers don’t need to buy foreign currency. Indeed, Russian corporate demand for FX was subdued at various intervals in 2025, another reflection of rubleized trade flows.

At the same time, Russia’s selling yuan and gold to plug budget holes created by falling energy receipts and hefty war expenditures. Supply and demand: The Russian state supplies yuan and gold in those transactions and creates demand for rubles with the effect of bolstering the currency.

And then there’s rates which are, of course, still quite high despite a series of cuts from Elvira Nabiullina.

As the figure above shows, the policy rate’s 16% after this month’s 50bps reduction. That’s well off the peak, but still punitive. Headline CPI was 6.6% in November. You do the math: The policy rate’s 9ppt higher than annual inflation. That likewise underpins the ruble.

This isn’t a good news story for the Kremlin. Or if it was, it’s too much of a good thing by now.

Sure, you want currency stability — Putin and Nabiullina went to great lengths to provide for it in the face of the initial sanctions blitz — but now Russia has a currency that’s far stronger than the government expected at a time when prices are low even for unsanctioned energy, to say nothing of Russian exporters’ discounted contraband.

Domestically, rates as high as they are in Russia aren’t exactly conducive to robust growth outcomes, or at least not outside of the heavily subsidized war economy. Yes, a near 50% rally in the local currency’s obviously good for fighting inflation, but even if price growth ebbs to, say, 5% and policy rates are cut to let’s call it 12%, that’s a recipe for stagflation.

The ruble’s 12-month rally counts as the largest appreciation in over three decades, which is to say it’s a record for the modern Russian state.