Vladimir Putin has praised Donald Trump for "keenly" gauging public sentiment in order to win the US election, and denied White House claims that Russia had meddled with the vote.
Speaking during a marathon end-of-year news conference, Russian president Mr Putin said he sees "nothing unusual" in Mr Trump's pledge to strengthen the US nuclear forces, saying the statement was in line with the president-elect's campaign promises.
In his wide-ranging remarks, the Russian leader claimed that his country's military is stronger than any potential aggressor, but acknowledged that the US military is bigger. He also cast the modernisation of Russia's nuclear arsenal as a necessary response to the US missile defence system.
"It's not us who have been speeding up the arms race," Mr Putin said, claiming that the Russian military's nuclear missiles can penetrate any missile defence.
During the US election, Mr Putin described President Barack Obama's accusations of Russian hacking into Democratic leaders' emails as an attempt to shift the blame for Hillary Clinton's defeat.
Asked how he responded to Mr Obama's accusations when he brought them up in their conversation, Mr Putin said he would not divulge details of a confidential discussion.
He shrugged off Washington's claims of the hackers' Russian affiliation, saying they could be based elsewhere.
"The most important thing is the substance of the information the hackers have uncovered," Mr Putin said, adding that the Democrats should have apologised to Americans over the "manipulations" the emails revealed.
In response to Mr Obama's comment that "Ronald Reagan would roll over in his grave" upon seeing recent poll results showing that more than one-third of Republicans view Mr Putin favourably, the Russian president said Mr Reagan would be happy to see his party win.
"It shows that a significant part of the American people have a similar view about the situation in the world and what we need to do - what the common dangers and problems are," he said.
The two countries' relations have plummeted to their lowest level since the Cold War. Mr Putin said he agrees with Donald Trump's assessment of poor US-Russian relations, adding that they "can't be worse".
Noting this week's attack in Berlin, Mr Putin called for better co-operation in fighting terrorism, saying such efforts between Russia and the West have been effectively paralysed by Western sanctions against Russia.
Mr Putin expressed hope that he would meet Mr Trump soon to discuss how to improve the two countries' relations - and would "definitely" visit the United States if he is invited by the president-elect.
The Russian leader added with a smile that "no-one but us expected him to win".