Russian ruble's dive sparks shopping spree among Chinese

"I have never seen so many Chinese people in Moscow, it feels like I am shopping back at home," an exchange student told the Shanghai's China Business News on Tuesday afternoon.

In light of Russia's slumping economy, the country has become a shopping haven for big spenders from China, who have cleaned out Moscow's high-end boutiques.

As opposed to a year ago when the yuan was trading at about 6 against the ruble, now as it trades at about 9.7 against the ruble, Chinese shoppers are enjoying savings of nearly 80% in Russia.

At Moscow's upscale Atrium Mall, Chinese shoppers could be seen snapping up top luxury-brand products by Gucci, Louis Vuitton.

"Inside a Louis Vuitton store, purchased handbags from nearby boutiques are piled three layers high as Chinese shoppers continue on their spending spree," said another Chinese, who is a Moscow resident, adding that inventory at the local Chanel, Hermes, and Cartier stores had been exhausted.

Local newspapers are filled with headlines about the dwindling strength of the ruble, which is heading towards 1:100 against the Euro, and 1:80 against the US dollar.

Financial institutions in Moscow have since ceased and barred the public from exchanging the ruble for other currencies, allowing only the reverse, said the Chinese Moscow resident.

Eager shoppers have also cleared the Moscow currency exchange offices of rubles.

The paper also reports that sales of luxury cars have surged by about 60% on a month-on-month basis since November, as Russians scramble to preserve the value of their ruble holdings by purchasing luxury cars manufactured by Lexus, Porsche, Mercedes Benz and Aston Martin.

For Russians, the ruble's decline spells severe consequences in the future. Overnight, the price of a hamburger at a school cafeteria has jumped 10% from 50 to 55 rubles, while other common household goods have also seen prices climb by an average of 20%.

Despite the Russian central bank's announcement to raise the benchmark interest rate from 10.5% to 17% at roughly 1 am Moscow time on Dec. 16, the move could not halt the ruble's decline, which continued to weaken to 67.92 against the dollar after the rate hike the following day.

Philip Uglow, chief economist at MNI Indicators, a German company specializing in providing business and macro-economic reports, said that the Russian central bank is expected to have a hard time convincing the world that it is capable of halting the ruble's dive. A rebound in oil prices may help halt the ruble's downward trajectory, but that is unlikely to happen any time soon, Uglow noted.

Russia's economic prospects have also been exacerbated by Obama's declaration of new US sanctions announced Dec. 17.

Source: Want China Times