The USRCCNE Monthly Newsletter
For those with interests bridging the US and Russia
From Josh Wilson, General Editor, USRCCNE
The last two weeks in Moscow have been exciting, to say the least.
The ruble rapidly dropped from about 45 to the dollar to, at its lowest, about 80. Russians, realizing that their economy is heavily reliant on imported goods – which take up a lion’s market share of electronics and clothing as well as 40% of all food – have hastened to effectively batton down the hatches against a coming economic storm.
Many of those who have savings (71% of all Russians have none) have converted their ruble savings to dollars or euros. It seems that more commonly, however, Russians have simply liquidated their savings and spent them on durable goods. Traditionally brisk holiday shopping has escalated to the point that, for example, Ikea sold so many kitchens and appliances that it ran out stock and had to close those departments. Media Markt, a major electronics dealer, saw sales double for the first two weeks of December this year compared to last. Businesses such as Jaguar and Volvo, which are heavily dependent on exchange rates, shut down with stock still on the floor for fear that they would lose too much due to rate differences.
For Russians, however, this is not panic. Their actions are perfectly logical and, for the most part, being undertaken quite dispassionately. Having lived through three crises in the past two decades, the Russians are well versed in how to survive and do not even seem particularly surprised that another crisis faces them today.
It has also helped that the Russian government has moved to counter the fall. The Central Bank and Finance Ministry have sold massive amounts of foreign currency. New measures to protect banks and depositors are in force. The rising tides seem to be pushed back, at least for now. The ruble remains volatile, but has stabilized at around 60. With impending sales of foreign currency by businesses to pay taxes and other expenses, this level is expected to hold through the New Year holidays.
What does this mean for 2015? Some argue that the new exchange rate differentials will encourage domestic investment and will, in the end, be good for Russia. Others predict escalating economic problems, perhaps even political turmoil. What most can agree on, though, is that Russia is becoming a very different place for businesses and consumers. Supply chains, business structures, and even entire economic sectors will have to be restructured. Supply disruptions and shortages will probably occur. Inflation will be a significant challenge.
But then, nobody comes to Russia to live or do business because it’s easy.
Our final newsletter for 2014, in honor of the business structure that will probably best sail 2015’s choppy seas, is lean and focused. You’ll find a few articles that help explain the current crisis, how it is affecting people and businesses, and what it may mean to the global economy.
We wish you health, strong nerves, and patience in the coming year!
Don't Miss This Month!
As always, this newsletter is dependent on you. If you have an announcement or a news item to be included in our newsletter, or if you would like to subscribe to this free publication, please contact us.
Film: Genghis Blues
(Jan 3, 8, & 17, 2014 - Clinton, MA) Genghis Blues chronicles the extraordinary odyssey of Paul Pena, a blind Massachusetts blues musician of Cape Verdean descent, who teaches himself Tuvan “throat-singing” – a mysterious and complex art in which multiple vocal tones are produced simultaneously – and is by chance invited to the 1995 throat-singing festival in Tuva.
Food and Festivals: A Culinary, Cultural Overview of Ukraine and Georgia
(June 17 - 30, 2015) Especially for educators! Explore the cultural and culinary heartlands of Ukraine and Georgia. This short tour is specially designed to serve as teaching inspiration.
Featured Member Articles
Best Places for Business Meetings in Moscow
A short list from Russians in Moscow on where they like to hold business meetings. If you are a USRCCNE member and would like to suggest an addition, we'd love to feature your company in an updated version of this article!
Ukraine’s New Ruling Political Parties
The political platforms of Ukraine's two new ruling parties are given in full and in English with brief backgrounders in an attempt to ascertain what citizens felt they were voting for in electing these two new parties. Subscribe to the SRAS Newsletter
Accounting Policy in Russia
An accounting policy is not only a set of rules and regulations which, when applied in practice, ensures that all employees of a company correctly process financial information, but also a legal instrument. Subscribe to the Alinga Market Update
US: Executive Actions on Immigration
What does the new executive order mean for immigrants? From USRCCNE member Maged & Rost PC
The Linguistic Battle Against Ebola
A major factor in limiting the outbreak in West Africa is disseminating accurate information about protection from the disease and clearing up myths related to the epidemic. Unfortunately, the multitude of spoken languages in West Africa means that a vast amount of people in the affected areas do not have access to information they can understand. Subscribe to the LanguageConnections Newsletter
If you have an ad to submit to this space, contact us! Free for members!
USRCCNE and Member News
Auriga experts participated in the international forum All-over-IP Expo 2014 that took place on November 19–20 in Moscow. The event included an extensive business agenda and an exhibition where over 150 large Russian and international companies—such as Microsoft, Panasonic, Honeywell, Geutebrueck, Sony, Siemens, and JVC—demonstrated their products and services in the areas of video surveillance, security, and IT.
Alinga Co-hosted Seminar on Workplace Safety, Tax Legislation, Deoffshorization
Alinga Consulting, Podolsky & Klein and HSA Group presented an informative seminar to answer many questions pertinent to businessess in Moscow. The powerpoints from these presentations are now available for free download.
Fellowship for Female STEM Ph.D. Students in Georgia
The Georgian Women Research Fellowship Program aims to increase the number of women scientists and engineers operating in the Georgian scientific community. This is the first program of its kind awarded by CRDF Global.
Translating Lovin’ Spoonfuls Recipes
A non-profit based in Boston, “Lovin’ Spoonfuls, delivers healthy food that would otherwise be discarded where it is most needed. Recently, the company requested that we translate recipe cards into Spanish, Haitian Creole, Russian, Portuguese.
Travel and Transport
Russian Work Visa/Permit Rules Change
New rules for work permits will come into force on Jan 1. HQS just a got a little more preferable.
Russian Dual-Citizenship Law: First Dentintion
A Russian citizen in the Leningrad region, who also holds, but did not declare, stateless status in Estonia, has become the first person detained and charged for not declaring a second citizenship / residency in Russia. (Article in Russian)
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Business and EconomyWhy Russia Will Halt the Ruble’s Slide and Keep Pumping Oil
Russia’s ruble may have strengthened sharply Wednesday, but it’s plunge in recent days has encouraged plenty of talk about the country’s catastrophe, with some even proclaiming that the new Russia is about to go the way of the old USSR. Don’t believe it.
Do Rosneft's Strange Bonds Signal Russian QE?
The newly issued Rosneft bonds were added to the list of collateral that can be used to obtain loans from the Central Bank.
Russian Lawmakers Rush Through Bill to Boost Banking Capital
on the street, Russians hardly seem to have flinched. There are no runs on banks or exceptionally long lines at stores. Few deny that Russia is in a fiscal mess, but by and large, they figure they’ve lived through worse – no matter who they hold responsible for the country’s present woes.
Russia Finance Ministry Starts Selling Foreign Currency Stock
"Sooner or later they'll flood the market with foreign currency, that's what the market expects. We're awaiting foreign currency from exporters, the finance ministry and central bank," said Igor Akinshin, a forex trader at Alfa Bank in Moscow.
Ikea, Jaguar Halt Russian Sales; Unable to Meet Demand
IKEA, the world’s biggest furniture retailer, said on Thursday it had temporarily stopped sales of kitchen furniture and appliances because it could not meet increased demand.
Russians Take Rapidly Falling Ruble in Stride
Few deny that Russia is in a fiscal mess, but by and large, they figure they’ve lived through worse – no matter who they hold responsible for the country’s present woes.
Muscovites Worried As Ruble Tumbles
Muscovites shared their concerns about the falling ruble on December 16, as the Russian currency hit historic lows. Note that they are worried, but not panicked.
Ruble Chaos Sparks Russian Spending Spree
Sales at electronics retailer Media Markt have doubled over the last two weeks compared with the same period last year.
What Russia’s Ruble Collapse Means for the World
A financial crisis would make the Kremlin more unpredictable, wreck western banks and heap misery on the Russian people.
Gazprom Crash Spreads to Mexico, Brazil
With investors selling Gazprom bonds and other Russian securities, emerging market analysts say that the pressure has already spread to Petrobras, which is enmeshed in a corruption scandal, and to Pemex, where the fear is that the oil price collapse will lead to a serious slowdown in Mexico.
Decline in Ruble Starting to Hurt Western Multinationals
The pain is sharpest for companies in Europe, where exposure to Russia is far higher than in the US.
Can Gold Deflect Western Economic Attacks?
Russia has been quietly stockpiling gold to insulate its national treasury against outside attacks, such as sanctions and asset freezes.
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Members of the USRCCNE become a part of a vibrant network of individuals and firms dedicated to furthering business opportunities between the U.S. and Russia. We work with business organizations in the US, (specializing in the New England region) and in Russia to bring exposure to the USRCCNE, and ultimately, to our members. Join today!