Bez Dollarov

1998 > Russia

And you though you were fast at changing the price tag on a GAP shirt!

A bad day to start teller training in Moscow
Hey, Me first!

I'll trade you a GKO for a fist full of rubles!


Time to wait for a better day
Out of the running
Wow, Russians are swift! Yesterday when I went to buy
cookies at the kiosk by my house, the prices were going up as I stood
there! When I walked up to the kiosk, the cookies were 8 rubles, but by
the time I figured out which ones I wanted, they were 10 rubles. As an
experience traveler, if I didn’t know better, I would think that they
were just doing the usual ‘gouge the American’ trick, but I do
know better. Prices are changing all over Moscow, and for everybody. The
economy here is unlike any other I have lived in, it is completely tied
to the United States Dollar. About 80% of all consumer products (food,
clothes, and toothpaste) are imported from Europe/USA, and all of it is
paid for in Dollars. All personal services (rent, trade services) are in
Dollars, and most Muscovites are paid in USD.

Combine that with a historically unstable currency, and you get a
nation that has a schizophrenic economy. By Russian law, all official
prices and payments are in rubles, but the ruble price is really the
ruble equivalent of a Dollar price. Big contracts are usually written
something like ‘payment at the ruble equivalent of $5,000 on the
date of sale,’ and even small shop prices have such contracts (not
as formal, of course) with their suppliers.

Why does all this matter, you ask. Well, with the drop in the value
of the ruble (rrl), from six rrl to the dollar, to nine or ten rrl to
the dollar in one week, all the prices in Moscow have to change. That’s
why my cookies went up, and why the salads I eat for lunch went from
eleven to twelve rubles. It is also why the restaurant I went to Friday
night had stickers over the old prices and new prices in pencil. As I
went shopping around town yesterday, I saw more effects of the ruble

First, expensive shops (nice clothes, electronics, and furniture)
were closed. The shop owners, unsure of the ruble rate, do not know how
to price their goods. If they could just have dollar prices and dollar
sales, they would be open, but when the ruble drops by the hour, they do
not want to loose on exchange rates in the time it takes to sign a
contract. Second, the food shops are very low on inventory. People are
spending all the rubles they were not able to convert into dollars,
because today, pasta is twelve rubles and tomorrow it will be thirteen,
so buy all you can today with the rubles you have. The shop owners,
having to purchase goods in USD, have found themselves unable to keep up
with demand, having watched their own purchasing power shrink.

Second, there were long lines at any exchange booth that had dollars.
Most exchange booths are out of USD, having sold them all last week. Now
that the Russians are convinced that the ruble will just drop lower,
they want to change as much rubles as they can, into dollars. The rubles
they cannot exchange, they are spending. Black market currency traders,
once scarce for all the legal exchange booths, are back to work the 15%
difference between the by and sell prices.

Last, but not least, stores, restaurants, and even kiosks are
starting to accept payments in USD again. Before, if you had USD, you
would have to go on the street and exchange it; the stores would not
accept it. Now, I can pay for my dinner with a Ben Franklin, and get
ruble change at decent exchange rate!

One odd offshoot of the USD shortage are rent payments. Since almost
all rent in Moscow is paid in USD cash, and there is none to be found,
tenants and landlords are scrambling to find new ways to make the
monthly transactions. My landlords, being the swift Russians that they
are, asked me to send a wire transfer to their Swiss bank account. And I
thought I was going to get out of paying rent for the month, damn!

Toronto Sun September 7, 1998

Panic buying grips Moscow

By Matthew Fisher

MOSCOW — The cranky woman in the brassiere shop in the tunnel
leading to the Kitai Gorod Metro station has an impossible job. Small
wonder she appeared agitated. Every few hours she had to put new price
stickers on the 200 or so western-made bras and panties dangling in her
shop window.

A fortnight ago about six rubles bought an American dollar. Money
changers now quote a price of 16 or 17 rubles to the dollar, but this is
pure fantasy. There are almost no dollars to be had anywhere in Russia
except on the black market, where a single Ben Franklin, as the American
$100 bill is sometimes called here, fetches as much as 2,500 rubles.

Plainly speaking, what this means is that the ruble has suddenly lost
75% of its value after several years of relative stability. With the
Yeltsin government and the parliament deadlocked over who should be
prime minister and how to begin trying to halt the collapse of Russia’s
feeble economy, nobody has yet dared guess how low the ruble will go.

These are strange days in Moscow. Many shops are closed because their
owners and managers can’t figure out what the prices should be. Those
that are open are constantly repricing their stock.

As hyperinflation starts to set in, there are some bargains to be had
for those with dollars to spend. The best deals are in Moscow’s endless,
bleak suburbs where there are few banks and currency exchange shops with
message boards to inform clerks or customers of the very latest ruble

At the tiny market across the street from my flat on the southern
edges of the capital a loaf of bread now costs the equivalent of 40c.
Two weeks ago it cost 90c. A can of Italian baked beans is 25c. That’s a
third of what they were in late August. And my favourite banya, or
bathhouse, costs exactly half yesterday what it did 19 days back.

Flush with purple 500 ruble notes, which were losing their lustre by
the minute, a friend of mine spent five hours hunting for a shoe store
on Thursday that was actually willing to sell her shoes. She bought
British and Spanish shoes for 500 rubles just as the store closed its
doors for the day at noon. When it reopened the next morning the same
two pairs of shoes had been marked up to 1,500 rubles each.

On Tuesday I found St. Petersburg mineral water at what was then the
equivalent of $1 a bottle. Two days later in another store the same
bottle only cost the equivalent of 50c.

So-called New Russians were inordinately proud of their new credit
cards, but just as they were getting used to showing them off, signs
went up that are a form of economic apartheid familiar from Soviet
times. Only credit cards issued by foreign banks are now accepted.

Fearing that imports of foreign consumer goods are doomed, Moscow’s
small middle class went on a wild spending spree last week emptying
shops of brand name washing machines, refrigerators and television and
liquor shops of wine and vodka.

The trick in such crazy circumstances, as every babushka knows, is to
hunt around, live within your means and never panic. These pragmatic old
women, who keep most Russian families going, have been quietly taking
rubles out of their mattresses and from under their floorboards to buy
up large quantities of staples such as salt, sugar and pasta.

Many babushkas are slicing loaves of bread and then drying them in
their ovens so they can be eaten with tea and preserves during the long
winter which looks like it is coming one or two months early this year.

Better than anyone else, what these wrinkled veterans of Stalin’s
lunacy, the Nazis’ siege of Moscow and decades of Soviet privations
understand is that Russia will be very short of food in the coming
months. It’s not just the supply of western consumer goods which will
soon dry up. Russian agriculture is in such a calamitous state that the
country imports between 40% and 70% of its food. Severely spooked by
huge losses, few western firms will be importing anything into Russia
unless they are paid in advance. Given that Russia cannot now repay
debts which run into the hundreds of billions of dollars, that may be
impossible for years to come.

Customs points already report a big drop in road and sea traffic. The
rumour mill has it that Moscow may be forced to dig into its three-month
strategic food reserve even before the first snow flies. Whatever the
ruble is worth by then may not matter much.