Russian Consumers Spending Like Crazy in Effort to Dump Falling Ruble
- They are buying everything they can get their hands on - furniture, cars, jewelry, apartments
- IKEA is swamped
This article originally appeared at Zerohedge
In the most ironic twist of all amid the "currency crisis" enveloping Russia, we suspect the world's central bankers will be looking on jealously as The CBR manages to achieve precisely what The BoJ and The Fed are desperate to achieve.
In raising inflation expectations, The FT reports, Russians are hurriedly turning their depreciating Rubles into jewelry, furniture, cars, and apartments as the currency's collapse prompts a shopping spree that will likely lead to a surge in GDP.
As one anxious shopper noted, "none of us know what’s happening. We’re all worried that the currency will keep falling," and so "it’s time to buy furniture!"
Russians hurried to change their savings and pensions into dollars and euros while also stocking up on furniture and jewellery as the rouble’s collapse accelerated.
Their mounting concern was reflected on Tuesday morning in the red lights of the currency exchange booths that dot the city, which were ticking over to show ever weaker rouble rates.
“I took out some of my pension and I want to change it into dollars,” said Galina, a retiree, who declined to give her surname. “None of us know what’s happening. We’re all worried that the currency will keep falling.”
The dramatic collapse in the rouble in recent days has not triggered outright panic, but it has prompted a rush to change currency and to stock up on durable goods such as furniture, cars and jewellery before they become even more expensive.
"I think the rouble will carry on falling until the end of the year,” she said. “It’s time to buy furniture!”
Indeed, shoppers reported enormous queues even at 2am in Ikea on Monday night as people rushed to stock up before the rouble plunge triggered price rises. The Swedish furniture company had said it would be raising prices from Thursday.
"People who didn’t manage to exchange their money at 35 roubles or 40 roubles to the dollar have been buying up high-end goods, cars and apartments because a massive repricing hasn’t happened yet,” said Vyacheslav Trapeznikov, acting director of the Urals Builders’ Guild, in Yekaterinburg.
Car sales in Russia rose in November from the previous month — in spite of a slowing economy — and December is “rather promising”, according to the Association of European Businesses in Russia trade group. “Retail demand has been extraordinary in recent weeks,” said Joerg Schreiber of the AEB.
“People are trying to spend their last roubles and buy up things that haven’t been priced, but this trend has an expiration date,” Mr Trapeznikov said.
Russians are lining up at currency exchange centers to swap their increasingly worthless Rubles for Dollars...
And as Germany's N-TV also notes, they are spending that money...
Shopping centers are currently experiencing a spectacular rush. The most recent example is the Swedish furniture chain Ikea, prior to their department stores in the past few days with long queues. Several hours had to wait for the customers before they could enter.
The reason is that Ikea had announced in early December to try to raise prices in the near future because of the decline of the ruble. While Ikea calmed after its customers that prices would continue to meet the published list prices in the summer. At the same time, the Group achieves in Russia each year well over a billion euros in sales, that its operations were dependent on external factors explained."At this point, Russia differs from industrialized countries to save where people start when a crisis begins," says the economist Igor Nikolayev. "For us, this is accompanied by a strong degradation of money and the people spend more, which relaxes the situation for some time," adds the analyst of consulting company FBK.
"People have rushed to buy expensive goods such as televisions, computers, laptops, to save their rubles, which lose value dramatically," says Maria Wakatowa of the consulting firm Watcom, the observed trade.
Simply put - it's all about inflation expectations. And unlike The Fed or The BoJ, who keep trying to jawbone higher expectations into their citizens' minds, the CBR has achieved it and with it - a spending spree before things get more expensive and implicitly a surge in GDP. Ofcourse, however, the spending surge can only be short-term and will stop as soon as there are no more Rubles to spend.
Finally - this seemed to sum it all up nicely...
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