Russia: RUB is facing a double shock – Nordea

The Russian economic policy framework focusing on stability and pursued since the crisis of 2014 is being put to the test by the current extreme oil market volatility, economists at Nordea brief. EUR/RUB trades at 84.32. 

Key quotes

“Now that the coronavirus scare is exacerbated by the OPEC+ deal collapse, the RUB is facing a double shock.”

“RUB volatility, as well as the Russian country risk premium, are far below the levels seen in 2008 and 2014.” 

“The risks of a global economic slowdown caused by the coronavirus outbreak are primarily threatening the export component of the Russian economy (contribution of up to 0.6% point to total expected GDP growth of 1.9% in 2020).”

“If the current weak RUB levels persist, the contribution of investment and consumption to GDP growth will also be at stake, creating a risk of a more material slowdown.”