12/20/2014
MOSCOW – Uncertainty over the future of Russia’s currency, the ruble, has forced multinational companies in a number of sectors ranging from automotive to textiles to temporarily suspend their supplies to Russia to avoid losses.
Spanish textile and fashion retailer Inditex is one of the companies that have taken this measure pending stabilization of the ruble, which has depreciated by over 50 percent in a matter of months, the Vedomosti newspaper reported in its Friday edition.
Other heavyweight multinationals in the textile industry taking a wait-and-see attitude with Russia include BNS Group, the corporation that runs clothing brands such as Calvin Klein, Armani Jeans, Michael Kors and TopShop in Russia.
A senior executive of the Russian subsidiary of TopShop, the British clothing retailer that operates in 37 countries, told Vedomosti that the decision was taken in light of the instability of ruble’s exchange rate.
Three days ago, on a day that some have dubbed “Black Tuesday,” the ruble lost 25 percent of its value against the dollar and the euro. And although the Russian currency quickly recovered its value, panic swept through businesses and consumers.
“Prices have risen steadily. You may spend half of your salary without buying a lot. Prices of all food products, including meat, dairy and fish have risen. Everything has gone up except for the salary. We are attempting to survive,” Olga, a cook, told Efe.
However, the prices of most imported goods, except for food products, had hardly changed in recent months despite a continuing decline of the ruble since the beginning of the year, especially in October.
Many Russians, especially those living in the prosperous cities of Moscow and St. Petersburg, rushed to spend their savings ahead of what they fear will be an overall rise in the price of just about everything.
Shelves at big discount retailers such as M-Video and Techno-Sila have emptied out in just three days, according to Efe’s correspondents.
The Swedish furniture and household goods multinational Ikea, suspended sales on Thursday sales of kitchen furniture and appliances in its stores in Russia due to the high demand.
Even large automakers, including giant General Motors have halted sales in Russia, according to the Kommersant business newspaper.
The suspension of supplies and sales coincides with Christmas season and could last until early January if uncertainty remains in the currency markets.
However, Russian officials say the ruble is still undervalued even after its recent rebound.
Despite the plunge in oil prices, Western sanctions against Moscow over the crisis in Ukraine and the bad economic situation that led to the ruble’s depreciation, the Kremlin believes that the currency will rebound in the coming weeks.
Russian President Vladimir Putin, who acknowledged for the first time Thursday that the country has entered an economic crisis, was optimistic about the future of the ruble and endorsed measures taken so far by the Central Bank to support the national currency.
source
MOSCOW – Uncertainty over the future of Russia’s currency, the ruble, has forced multinational companies in a number of sectors ranging from automotive to textiles to temporarily suspend their supplies to Russia to avoid losses.Spanish textile and fashion retailer Inditex is one of the companies that have taken this measure pending stabilization of the ruble, which has depreciated by over 50 percent in a matter of months, the Vedomosti newspaper reported in its Friday edition.
Other heavyweight multinationals in the textile industry taking a wait-and-see attitude with Russia include BNS Group, the corporation that runs clothing brands such as Calvin Klein, Armani Jeans, Michael Kors and TopShop in Russia.
A senior executive of the Russian subsidiary of TopShop, the British clothing retailer that operates in 37 countries, told Vedomosti that the decision was taken in light of the instability of ruble’s exchange rate.
Three days ago, on a day that some have dubbed “Black Tuesday,” the ruble lost 25 percent of its value against the dollar and the euro. And although the Russian currency quickly recovered its value, panic swept through businesses and consumers.
“Prices have risen steadily. You may spend half of your salary without buying a lot. Prices of all food products, including meat, dairy and fish have risen. Everything has gone up except for the salary. We are attempting to survive,” Olga, a cook, told Efe.
However, the prices of most imported goods, except for food products, had hardly changed in recent months despite a continuing decline of the ruble since the beginning of the year, especially in October.
Many Russians, especially those living in the prosperous cities of Moscow and St. Petersburg, rushed to spend their savings ahead of what they fear will be an overall rise in the price of just about everything.
Shelves at big discount retailers such as M-Video and Techno-Sila have emptied out in just three days, according to Efe’s correspondents.
The Swedish furniture and household goods multinational Ikea, suspended sales on Thursday sales of kitchen furniture and appliances in its stores in Russia due to the high demand.
Even large automakers, including giant General Motors have halted sales in Russia, according to the Kommersant business newspaper.
The suspension of supplies and sales coincides with Christmas season and could last until early January if uncertainty remains in the currency markets.
However, Russian officials say the ruble is still undervalued even after its recent rebound.
Despite the plunge in oil prices, Western sanctions against Moscow over the crisis in Ukraine and the bad economic situation that led to the ruble’s depreciation, the Kremlin believes that the currency will rebound in the coming weeks.
Russian President Vladimir Putin, who acknowledged for the first time Thursday that the country has entered an economic crisis, was optimistic about the future of the ruble and endorsed measures taken so far by the Central Bank to support the national currency.
source
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