MOSCOW, Feb 25 (Reuters) - The Russian rouble surged

against the U.S. dollar and China's yuan after President

Vladimir Putin outlined potential deals with the U.S. on rare

earth metals and aluminium as part of the future agreement to

end the war in Ukraine.

At 0830 GMT the rouble was up 1.1% at 86.80 against

the dollar in the over-the-counter market, the strongest since

August 9, 2024. The rouble strengthened 1.3% to 11.81 against

China's yuan, the most traded foreign currency in Russia.

Russian President Vladimir Putin offered the U.S. on Monday

the opportunity for joint exploration of the country's rare

earth metals deposits, as well as the supply of aluminium to the

U.S. domestic market, under a future economic deal.

U.S. President Donald Trump said earlier that "major

economic development transactions with Russia" would take place.

Within two hours of Trump's statement, Putin chaired a meeting

with his ministers and economic advisers on rare earth metals.

"For a long time, the rouble's exchange rate included a

geopolitical risk premium. As progress is made in negotiations,

it is naturally narrowing," BCS brokerage analysts said,

predicting that the rouble could soon hit 85 to the dollar.

The Russian currency has gained over 23% against the dollar

this year, mostly on expectations of better relations with the

United States under President Donald Trump.

Dollar/rouble futures on MOEX, which serve as guidance for

over-the-counter rates, were down 1% at 87.75. The Russian

central bank set the official exchange rate at 88.20.