Russians shop as ruble nosedives
Print Edition
RUSSIAN consumers flocked to stores yesterday, frantically buying a range of big-ticket items as they looked to pre-empt price rises following the staggering fall in the value of the ruble over recent days.
As the government looked at ways of easing the selling pressure on the ruble, which has slid 15 percent in just two days and raised fears of a bank run, many Russians were buying cars and home appliances — in some cases in record numbers — before prices for these imported goods shoot higher.
Swedish furniture giant IKEA, for one, has already put consumers on notice that its prices will rise today, which resulted in weekend-like crowds yesterday afternoon.
Shops selling a broad range of items are reporting record sales while some have had to suspend operations, unsure how far down the ruble will go. Apple, for one, has halted all online sales in Russia.
Alyona Korsuntseva, a woman in her 30s, says the current jitters surrounding the Russian economy reminded her of the 1998 Russian crisis when the ruble tumbled following the government’s default on sovereign bonds.
“What’s pressuring us is the fact that many people rushed to withdraw money from bank cards, accounts,” she says. “We want to safeguard ourselves so that things wouldn’t be as bad they were back then.”
The ruble has suffered catastrophic losses this week as traders fretted over the impact of low oil prices on the Russian economy, as well as the impact of Western sanctions imposed over Russia’s involvement in Ukraine’s crisis.
It even lost ground on Tuesday after the surprise move by Russia’s central bank to raise its benchmark interest rate to 17 percent from 10.5 percent. The hike was intended to make it more attractive for currency traders to hold onto their rubles.
After posting fresh losses early yesterday, the ruble was up and down all day before settling at 3 percent higher at 65 rubles per US dollar at 4pm Moscow time.
One reason why the ruble has advanced is that Deputy Finance Minister Alexei Moiseyev was quoted by the Interfax news agency as saying that the government is going to sell foreign currency “as much as necessary and as long as necessary.” That, the hope is, would relieve the pressure on the ruble, particularly against the dollar.
In light of the currency’s slide, Prime Minister Dmitry Medvedev hosted a meeting with the heads of Russia’s largest exporters and pledged to implement a “package of measures” to stop the decline of the ruble. He said the details of the measures to be pursued will be hammered out at the meeting and these will be only “market steps.”
“This is a very dangerous situation, we are just a few days away from a full-blown run on the banks,” Russia’s leading business daily Vedomosti said in an editorial yesterday.
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