Russians rush to stock up dollars
The central bank has expanded the ruble’s trading band against a basket of dollars and euros, allowing it to drop 0.8 percent, said a spokesman who declined to be identified on bank policy.
By Bloomberg |
MOSCOW: Moscow resident Tima Kulikov banked on the full faith and credit of the US government, not the Kremlin, when he sold his biggest asset for cash. The 31-year-old director of a social networking website initially agreed to sell his apartment for rubles, then cringed at the thought of the currency weakening as it sat in a lockbox pending settlement of the contract.
It wasn���t until the buyer showed up with $250,000 stacked in old mobile-phone boxes and stuffed in his pockets that Kulikov closed the deal. ���The exchange rate we agreed on wasn���t great, but I did it because the money���s going to lie there for a month,��� Kulikov said. ���Put it this way, the ruble���s more likely to have problems than the dollar.���
Russians are shifting their cash into foreign currencies and buying things they don���t need as the economy stalls and the central bank weakens its defense of the ruble, signaling a larger devaluation may be on the way. The currency has fallen 16 per cent against the dollar since August, when Russia���s invasion of neighboring Georgia helped spur investors to pull almost $200 bn out of the country, according to BNP Paribas SA.
The central bank has expanded the ruble���s trading band against a basket of dollars and euros, allowing it to drop 0.8 percent, said a spokesman who declined to be identified on bank policy. With the specter of the 1998 debt default and devaluation in mind, Russians withdrew 355 bn rubles ($13 bn), or 6 percent of all savings, from their accounts in October, the most since the central bank started posting the data two years ago. Foreign-currency deposits rose 11%.
Those withdrawals are increasing pressure for the ruble���s devaluation, according to Basil Issa, an emerging- markets analyst at BNP Paribas in London.
It wasn���t until the buyer showed up with $250,000 stacked in old mobile-phone boxes and stuffed in his pockets that Kulikov closed the deal. ���The exchange rate we agreed on wasn���t great, but I did it because the money���s going to lie there for a month,��� Kulikov said. ���Put it this way, the ruble���s more likely to have problems than the dollar.���
Russians are shifting their cash into foreign currencies and buying things they don���t need as the economy stalls and the central bank weakens its defense of the ruble, signaling a larger devaluation may be on the way. The currency has fallen 16 per cent against the dollar since August, when Russia���s invasion of neighboring Georgia helped spur investors to pull almost $200 bn out of the country, according to BNP Paribas SA.
The central bank has expanded the ruble���s trading band against a basket of dollars and euros, allowing it to drop 0.8 percent, said a spokesman who declined to be identified on bank policy. With the specter of the 1998 debt default and devaluation in mind, Russians withdrew 355 bn rubles ($13 bn), or 6 percent of all savings, from their accounts in October, the most since the central bank started posting the data two years ago. Foreign-currency deposits rose 11%.
Those withdrawals are increasing pressure for the ruble���s devaluation, according to Basil Issa, an emerging- markets analyst at BNP Paribas in London.
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