The collapse of the ruble is bad news for exporters, and a disaster for millions of families depending on migrant workers in Russia. And there are signs it is also fraying nerves in the Kremlin’s inner circle.
Ria Novosti / Reuters
Apple has shut down its Russian online store because the ruble is falling in value so fast they can't figure out what to charge for an iPhone. There was a 1 a.m. rush on Ikea in Moscow last night as customers stocked up before an expected price rise in the coming days. People are queuing outside foreign exchange shops, trying to get rid of their rubles before they lose even more of their value.
The meltdown of Russia's currency, brought on by falling oil prices, collapsing confidence in the central government, and international financial sanctions, is now manifesting itself as a panic. It's "the most incredible currency collapse I think I have ever seen in the 17 years in the market, and 26 years covering Russia," wrote Timothy Ash, Standard Bank's head of emerging market research, in a note this morning. "No one expected the ruble to hit 60 this year against the dollar, let alone 70 or 80 even. And no one is positioned for this. This will impart huge short term damage to Russia."
And the reverberations will be felt beyond the country's borders, globally, but most acutely by its neighbors, where the oil-fueled Russian boom of the last decade has rained cash upon exporters and economic migrants alike.
Consider Tajikistan. Remittances — cash sent home from citizens working abroad — make up 42% of the Central Asian republic's GDP, according to World Bank data, with almost 60% of those remittances coming from Russia. In the course of just a few months, the value of those remittances has been chopped in half. The results will be devastating.
It's not just Tajikistan: Moldova gets about 25% of its GDP from remittances, the Kyrgyz Republic 31%, Uzbekistan 12%. Russia is the largest source for each, and that flow of much-needed cash is now being reduced dramatically.
Cuts in remittance flows cause an unusually direct kind of economic pain, because the money goes quite literally into the pockets of everyday people, typically working-class families relying on a breadwinner working abroad for their disposable income. Unlike, say, international aid programs or foreign direct investment, the money isn't siphoned through a bureaucracy or multiple intermediaries before getting spent — every dollar less that makes it home is a dollar less that gets spent in the local market.
It's not just the family of a Moldovan taxi driver in St. Petersburg who get stung by a collapsing ruble. As its oil wealth swelled, Russia became an enormous importer of new cars from Japan and Germany, electronic gadgets from China, meat from Brazil. Exporters in all these countries now face a future where one of their largest clients has a lot fewer dollars to spend. In a world of slowing Chinese growth and stagnation in Europe, every dollar lost from Russia matters.
Here are the countries with the most to lose: Russia's biggest import partners.
via IFTTT
No comments:
Post a Comment