Ruble collapse sparks shopping frenzy in future EEU partners

By bne IntelliNews December 18, 2014

Jacopo Dettoni in Almaty -

 

Consumers from Russia's future Eurasian Economic Union (EEU) partners – Armenia, Belarus and Kazakhstan - are using Russian online retailers to pick up bargains as the ruble’s collapse strengthens their dollar-linked currencies.

The Armenian dram, Kazakh tenge and the Belarus ruble have risen to levels against the Russian ruble unseen since the 1998 ruble crisis. Since the beginning of the year, the ruble has depreciated by 55% against the dram, 58% against the tenge and 65% against the Belorussian ruble as all these currencies remain, to different extents, technically tied to the US dollar.

As a consequence, the price of goods sold by Russian online retailers has grown increasingly cheaper than those offered in neighbouring domestic markets. In November alone, Armenians spent 123% more on Russian online shopping websites than in November 2013, Belorussians 78.3% more and Kazakhs 32.5% more, according to figures from UCS, one of Russia's largest card payment processing companies.

There was a surge in demand for consumer favourites such as Apple's iPhone 6, Russian imports of which were 25% cheaper than in Armenia, Kazakhstan or Belarus over the last few days, Russian press reported. That was enough to prompt Apple to halt online sales in Russia on December 17 because the rouble's value was too volatile for it to set prices.

Arbitrage opportunities are not limited to the web. Kazakhs living in northern provinces bordering Russia are reportedly buying cars across the border to save over 20% on the sale cost, according to figures published by Kazakh car website Kolesa.kz. Cross-border real estate transactions are on the rise too.

However, if shoppers are enjoying the ruble’s collapse, local exporters are feeling the chill as their products have become relatively more expensive than they used to be.

“We currently have exported solely 50% of the originally planned amount to Russia,” Vahagn Mkrtchyan, an Armenian wine producer, told news website News.am earlier this month. 

“The purchasing power of Russians has dropped and sales of Kyrgyz garment companies decreased by approximately 16% [in 2014] compared with 2013,” Sapar Asanov, a representative of the Krgyz garment industry, told news website Kabar on December 17. Kyrgyzstan, whose currency has gained 61% against the ruble in the year-to-date, is expected to confirm its EEU membership by the end of the year.

Armenia, Belarus, Kazakhstan, and Kyrgyzstan all have narrow industrial bases and local producers fear the competition of duty-free Russian products as the EEU comes online on January 1. The current ruble depreciation will add to their woes. 

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