Exports to increase as Russian rouble collapses.
Abu Dhabi: Decline in Russian rouble will provide a chance for traders to increase their exports to the UAE, chairman of Russian Business Council said. "It is a big opportunity for Russian exports. We might see a growth in this sector as rouble falls. Exports of construction raw materials and precious metals to the UAE will be increase," said Igor Egorov.
The trade figures between Russia and the UAE stand around $3 billion at the moment. Russia exports diamond, gold, steel, defence equipment and machines to the UAE while it imports some machines and food products.
Egorov said investments in the financial sector are likely to grow in the region in the coming days. "There is a great opportunity for Russian companies to invest in the Islamic finance. However, there is an uncertainty how rouble will develop. Companies are carefully looking at the situation."
He added that there will be negative impact on imports in Russia. "When there was a similar crisis in 1998, the country focused on imports replacement."
The rouble hit its record low on Tuesday despite rate hikes by the Russian central Bank to 17 per cent from the earlier 10.5 per cent. The country's economy is getting affected due to sanctions over Ukraine situation and falling oil prices.
Kathleen Brooks, Research Director UK EMEA at Forex.com, an online trading platform, said in terms of trade, one would expect a falling rouble could weigh on imports of goods into Russia. "Russia is set to have a deep recession next year, and the central bank has raised interest rates to 17%, which is only going to make this recession worse, Fitch the rating agency mentioned this earlier," she said.
"Thus, if the UAE exporters have Russia as their main market they could be impacted. Overall, with Gulf currencies tied to a strong dollar, and the rouble likely to remain weak for some time, we could see Gulf currencies continue to appreciate versus the rouble for the medium-term."
On the tourism front, however, declining rouble could have a negative effect. "It would become more expensive to travel. People will think twice before making their travel plans. We might see less number of Russian tourists coming to the UAE," Egorov said.
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