Russia's economic situation spiralled out of control yesterday as its central bank’s shock decision to raise interest rates to 17 per cent failed to prevent a further collapse in the rouble.
The currency’s extreme volatility was reflected in a decision late last night by Apple – the world’s largest company – to suspend online sales to Russia. During the day, companies with exposure to the Russian market saw their share prices tumble.
“Due to extreme fluctuations in the value of the rouble, our online store in Russia is currently unavailable while we review pricing,” Apple said last night.
The rouble began the day at 64 roubles to the dollar. It strengthened marginally to below 60 against the dollar before rocketing up to 78 against the dollar. It had fallen back to 68 by late last night.
When asked about capital controls yesterday, economy minister Alexei Ulyukayev insisted: “No they aren’t being discussed.”
Shares retailer Magnit PAO dropped 7.15 per cent in London while X5 retail group – another retailer in Russia – saw its share price fall 11.07 per cent. In the financial sector, Sberbank lost 11.76 per cent in Moscow.
Carlsberg’s share price dived 6.52 per cent in Copenhagen – a significant slice of the brewer’s profits comes from Russia.
Nordea bank’s share price fell 1.9 per cent in Stockholm, OTP bank’s dropped 11.40 per cent and Raiffesien bank’s dipped 9.41 per cent in Vienna. According to researchers at Citigroup they are all more exposed to Russia than other European banks.
Deputy governor of the Rusian central bank Sergey Shvetsov admitted that the situation in Russian foreign exchange and stock markets was “critical”. Russia is suffering from accelerating inflation, a plummeting exchange rate, low growth, and economic sanctions.