Russians spending spree on real estate, cars as ruble plunges
The weak ruble is transforming the way Russian save and spend their money, with many turning to property, cars, and jewelry instead of seeing their money depreciate in the bank.
The ruble has lost about 45 percent of its value against the dollar this year, which leaves savers with slashed deposits. Some are simply taking their money out of the bank and putting it into tangible assets such as real estate and automobiles.
People living in big cities, such as Moscow, are rushing to get their hands on property to keep their savings intact.
Sergey Gordeev, a realtor in Moscow, says that the ruble crisis has turned cosmopolitan real estate into a sellers’ market.
“Now there's a flood of buyers it’s become a real auction,” Gordeev told RT.
The weak ruble has hiked inflation, which the Central Bank estimates will stay above 8 percent through the beginning of 2015. This has affected consumer prices for domestic products, particularly produce and foods.
However, it has slightly cheapened certain imports, such as electronics. Russia has become one of the cheapest places in the world to buy an iPhone, thanks to the weak ruble. It costs $700, cheaper than anywhere in Europe, and only $50 more expensive than in the US.
China’s third biggest smartphone producer, Lenovo, pegs the dollar to the ruble when calculating how much to sell products in Russia. So manufacturers of smart phones and tablets have frozen prices in Russia in an effort not to lose customers, Vedomosti reports.
Luxury cars are also a hot ticket, since car prices haven’t surged to match the devalued ruble, with SUVs especially in demand. Gold and silver are also back on the shopping list, and banks are selling everything from coins to bullion bars.
Between sanctions and falling oil prices, the Russian currency has been left battered. On November 7, the ruble hit its record low of 60 rubles to the euro, and grazed just above 48 against the dollar.
But the CBR and President Putin have been insisting the ruble would bounce back soon.
On November 10, the Russian Central Bank decided to abolish all regular currency interventions and let the currency float freely. It is aimed at cutting back on speculation by investors who bet against the ruble by pushing the central bank’s intervention corridor.
READ MORE: Russia ends dollar/euro currency peg, moves to free float
“That's like playing poker against the market – it means people have been betting against the Central Bank and winning,” Chris Weafer, partner at Macro Advisory, told RT.
