GarryB wrote:A falling rouble makes foreign products more expensive and domestic products more appealing on the local market.
More than that it makes international travel less appealing and encourages domestic holidays... in this case good news for sochi and crimea and the far east of russia.
Both of which are good things.
For exporters it makes their products cheaper on the international markets.... the only negative is with imported items that suddenly become rather more expensive.
That's right; due to the currency depreciation and airline prices going up, Russian holidays abroad have taken a big dive, although a few foreign countries are benefiting - such as Egypt & Turkey; whose number of Russian tourists have continued to climb this year. Thailand took a hit but only a small one, like down 6% on Russian tourists.
By far and away the big loser is Europe; with Russian tourists in some EU countries like Spain being down by up to 60%. I think Greece was hit one of the worst too; can't be good for them as Russian tourists are their 1st or 2nd largest group.
Krasnodar/Sochi, Abkhazia and the Crimea will be swimming in it come next Spring/Summer. For the more adventurous Russian traveler; there are such places as the Altai mountain ranges, Kabardino-Balkaria, Kamchatka, Lake Baikal - for sports tourism, eco-tourism, extreme tourism, hunting & fishing tours, hiking, etc... Then there are many cultural touristic destinations such as St. Petersburg, Moscow, the Golden Ring, Novgorod, parts of the Caucasus, etc... that many Russians wouldn't have been to and that they might take the opportunity to visit instead of Prague, Tallinn, Helsinki, Riga, Paris, London, Rome, etc... this winter.
We shouldn't forget that this currency devaluation also makes Russian tourist destinations more enticing for foreigners too. You might not expect it - but Russia is among the top 10 tourist destinations in the world AFAIK - there is certainly scope to improve this indicator
Certainly, Russia has covered quite a niche with the Volga River cruises for elderly Europeans and others. Good opportunity for expansion.
About EU agricultural produce we already know - Russia banned it; but even the stuff getting repackaged in Belarus still can't escape the price appreciation; while imports from countries such as Turkey, India, etc... are also becoming more expensive albeit still rising due to the food sanctions on Europe.
All this amounts to a great opportunity for Russian agriculture; their competition is being banned or priced out of the market - and again, not only for domestic consumers, but to sell abroad too.
Finally - import prices in general are rising. Once again this hits Europe the hardest - as most consumer and industrial goods come from them - and Russians; consumers and businesses both, will look for domestic alternatives, as well as imports from other countries whose currencies didn't appreciate as much relative to the Rouble as the Euro did.
I think it's a little early to speak of any Russian consumer goods export boom - but certainly Russian companies have a good opportunity here, main thing is they don't squander it.
Austin wrote:Not so simple , A falling rouble would be bad for inflation and macroeconomic stability
Also true. Such a sharp fall has shaken investor confidence, consumer confidence - and will inevitably lead to a correction. Which means that soon prices for domestic goods in Russia will start rising too, as Russian workers will demand higher wages to offset their higher costs of living and as imported parts and materials have become more pricey. Everything will rise in other words; goods prices, wages, etc... inflation - as with that, the prices of Russian goods for the export market will rise too and their temporary competitive advantage will steadily be eroded. So the key for them is to act quickly, IMO. Fortunately, Russia is a stable enough country and has good enough finances, to avoid a mass panic among its citizens or a real crisis of confidence among its consumers and investors. But still, there will be considerable negative consequences to the Rouble depreciation.