The collapse in the value of the Russian rouble against the US dollar is threatening to choke to death most sales of imported Western hardware in Russia. As the value of the rouble plummets, resellers are simply unable to make any profit from buying for hard currency and selling for roubles. The fall in the […]
The collapse in the value of the Russian rouble against the US dollar is threatening to choke to death most sales of imported Western hardware in Russia. As the value of the rouble plummets, resellers are simply unable to make any profit from buying for hard currency and selling for roubles. The fall in the value of the rouble has been precipitous. In successive weeks during November its rate against the US dollar fell from 396 to 419 to 448. Most banks outside Moscow were asking over 500 roubles for one US dollar by November 20. In early November resellers could still just about sell for roubles if they had hard currency capital of their own. (Credit is now so absurdly expensive that taking a loan would bankrupt most businesses). This was done by asking customers to sign contracts agreeing to pay at whatever rate the rouble stood at when their money was changed. Resellers left an inflation margin in their quotations to allow for the devaluation of the currency between transaction and delivery. By the end of the month this had become impossible as the entire nation began to sell roubles at almost any price. In the past nine months, the number of resellers in the Urals city Ekaterinburg has fallen from about twenty to half a dozen. I am surprised that the business remains alive at all, says Sergey Sannikov, head of the computer department of the Laiks Ural company, our whole business hinges on the twice-weekly announcement of the new exchange rate. In Siberia the pressure is the same. Yury Vereschagin is general manager of Novosibirsk-based reseller Fort. Though one of the largest computer outlets in the city, his company has now diversified into selling copiers, furniture and Polaroid cameras. In the New Year it plans to start selling synthetic flowers. The change is entirely due to the poor margins available from selling computers. He says Fort is only able to sell personal computers at all because it has a supplier willing to ship without full payment in advance – very uncharacteristic among companies selling in Russia. It then must gamble on the good faith of his customers to pay for the equipment they ordered when it is delivered. It is incredibly risky, he says. For the foreseeable future only the few Russian organisations with hard currency from export deals with the West are likely to be able to buy.