Forecasts for Russian economy and the ruble: It's time to buy US dollar and euro for roubles

Exchange Rates 04.06.2020 analysis

CMASF’s forecast for the Russian economy and the rouble:

According to the baseline scenario of the Center for Macroeconomic Analysis and Short-Term Forecast (CMASF), the Russian currency may weaken to 90 rubles per dollar by the end of 2020. In this case. the pandemic is likely to continue until the third quarter. Overall, experts at CMASF have prepared three possible scenarios for the Russian economy for the next few years.

Basic scenario.

Repeated quarantine due to coronavirus in October-November 2020. Unemployment may grow to at least 8% in 2021 and 7% in 2022-2023. Real wages in 2020 are likely to decrease by 4.5-4.8% and begin to grow by 2.2-2.5% only in 2023. According to the baseline scenario, the US dollar may cost 90 rubles until 2022.

Pessimistic scenario.

The second wave of restrictive measures due to COVID-19 in Russia from the end of 2020 to March 2021. Structural crisis of the global economy with steadily low oil and gas prices. In this case, unemployment in Russia is likely to increase to 10.5-10.7% in 2020, and remain at the level of 9.0-9.5% by the end of 2023. The US dollar exchange rate in this scenario may be about 100 rubles.

Optimistic scenario.

Lockdown in Russia ends in mid-June. There is no second wave of quarantine. Rapid stabilization of oil prices. No structural crisis of the global economy. In this case, the highest unemployment rate will be 5.3-5.6%. Real wages are likely to grow by 0.5-0.7% in 2021. The US dollar exchange rate may be about 85 rubles by the end of 2020 with a possible decrease to 80 rubles.

Conclusion: The current price of the US dollar is 68 rubles. According to the optimistic forecast, it may reach 80 rubles. This is +17% profitability for half a year and without leverage.

It’s time to buy the US dollar and the euro.

Source: Forecasts for Russian economy and the ruble: It's time to buy US dollar and euro for roubles

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