01 January, 2015
From VOA Learning English, this is the Economics Report.
The value of Russia's money recently dropped by 20 percent in one day. The ruble soon regains some of its
Russia's Central Bank has increased interest rates to 17 percent in an effort to support the value of the currency. Russian officials are seeking help from some of the countries' biggest companies.
In December, Russian Prime Minister Dmitri Medvedev met with the heads of export businesses, including the energy companies Rosneft and Gazprom.
He urged exporters to sell their foreign currency earnings, rather than save them, in an effort to support Russia's currency.
But not everyone is hurt by the ruble's decrease. Andrei Braginsky is a director of communications for Moscow Exchange. He says not all companies are suffering because of the falling value of the ruble.
"I think it really depends on company by company. Those exporters that have revenue in foreign currency and, of course, in rubles, they are not actually suffering that significantly," Braginsky said.
Russian exporters are paid in foreign currency, and can make gains when the ruble's value is low. Importers, however, suffer the most when their currency decreases in value, because foreign goods cost them more.
The U.S. computer company Apple halted online sales of its product in Russia to prevent losses from the exchange rate between the dollar and the ruble.
Russians looking for goods at stores in Moscow are buying them up because they are expecting price increases.
"Now, consumers are buying hectically. Because Russia largely [relies] on imported goods. There are a lot of stocks which were brought into the country at different currency levels. So, people are buying iPhones, they're buying imported cars, and the clothes, and everything they could buy still at old prices. So, it's a -- short-term at least, it's a consumer boom," Braginsky said.
Financial experts say the ruble's drop in value is not only affect the price buyers pay for goods. It also makes it more difficult for Russian companies to pay foreign debts. This has caused concern that some Russian companies may default or be unable to make their debt payments.
Falling oil prices and Western restrictions over Russia's actions in Ukraine are some of the reasons that the ruble's value has dropped.
In mid-December, the European Union agreed to increase sanctions against Russia. They include restrictions on finance and tourism in Crimea.
But economists say Russia faces a more basic problem -- its inability to use oil money to widen its economic activities and gain foreign investment.
And that is the Economics Report from VOA Learning English. I'm Mario Ritter.