Disappearing Russian Tourists Set to Offer Ruble Boost

(Bloomberg) -- Skip your vacation abroad this year, Russians have been advised, a message which is poised to shore up the ruble.

Prime Minister Mikhail Mishustin this week warned Russians against holidaying overseas, saying “too high a price may be paid for a few days of rest” as the battle to contain the coronavirus goes on.

Russians’ holiday spending in destinations like Turkey, Finland and Thailand typically outweigh revenue from foreign tourists in Russia by about $20 billion a year, according to Bloomberg Economics. Renaissance Capital economist Sofya Donets estimates that Russians’ spending on holidays abroad will drop by at least 50% this year.

“Most tourism could stay in Russia this year,” Donets said by phone from Moscow. “That would be a strong factor of support for the ruble.”

Stay-at-home Russians would account for the ruble trading 4 percentage points stronger against the dollar, without taking into account other factors, which may offset the impact, she said. The currency has gained 5.3% this month, trimming its loss so far this year to 12%, after it was pressured by the oil price crash and a flight from riskier assets.

The tourism impact will “partly compensate for the effect of lower oil prices and reduced exports” on the ruble, though the central bank’s currency operations will be an additional factor, ING economist Dmitry Dolgin said by email.

Russia’s borders have been closed since March 30 due to the spread of coronavirus.

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