Apple halts Russian online sales

Dec 17, 2014, 3:12 AM EST
Female customers from Russia touch packaged iPhones during the sales launch of the iPhone 6 and iPhone 6 Plus smartphones at the Apple Inc. store in Berlin, Germany, on Friday, Sept. 19, 2014. The devices generate more than half of Apple's annual $171 billion in revenue and precede a swath of other products, including new iPads and Apple Watch.
Bloomberg via Getty Images

Technology giant Apple says it cannot sell products online in Russia because the rouble's value is too volatile for it to set prices. The BBC writes:

The company stopped sales of its iPhones, iPads and other products in the country after a day in which the currency went into free-fall. The rouble has lost more than 20% this week, despite a dramatic decision to raise interest rates from 10.5% to 17%.

Early on Wednesday, the rouble was down 5% with one dollar buying 71 roubles. Its all time low, set on Wednesday, saw one dollar buying as many as 79 roubles.

Apple last month increased its prices in Russia by 20% after the weakening rouble left products in the country cheaper than in the rest of Europe. Russia's central bank said on Wednesday it had spent almost $2bn intervening in the currency market on Monday.

It has spent around $80bn trying to prop up its rouble this year, but despite that, the currency has lost more than half its value against the dollar since January, with cheaper oil and Western sanctions over its stance over Ukraine the chief factors. Both of these have weakened the Russian economy.

Russia's central bank has pledged fresh further measures to try to stabilise its currency, with First Deputy Governor Sergei Shvetsov describing the situation as "critical".

After the single worst day in Russia’s nine-month-old financial crisis, the fallout is spreading across global markets. Bloomberg News reports:

Pacific Investment Management Co. is facing mounting losses on its Russian bond holdings; almost every bullish ruble option contract registered in the U.S. has been made worthless; and foreign-exchange brokers in New York and London told clients they’re no longer taking ruble trades.

Sergey Shvetsov, a first deputy central bank governor, expressed astonishment at the scope of the collapse during a conference in Moscow. “We couldn’t imagine what’s happening in our worst nightmare even a year ago,” Shvetsov, who oversees financial markets at Bank of Russia, said yesterday.

He said the surprise interest-rate increase in the middle of the night, a 6.5 percentage-point move that failed to stem the run on the ruble yesterday, was a choice between a “very bad” option and a “very, very bad” option.

YOU MIGHT ALSO LIKE