08/25/1998 14:22:22 Moscow retailers hike prices as rouble dives
By Peter Graff
MOSCOW, Aug 25 (Reuters) - Retailers scrambled to raise
their prices on Moscow's streets on Tuesday as the Russian
rouble plunged 10 percent against the dollar.
The sharpest exchange rate fall in nearly four years sent
Russians scurrying to dump their roubles for hard currency.
By early afternoon the rush on exchange booths was not quite
as severe as during last week's initial announcement that the
rouble would be allowed to drop. But at wholesale goods markets,
where sellers keep a close eye on the currency, the inflationary
impact was felt immediately and more sharply than before.
At the Kiev Railway Station market, where large numbers of
street vendors stock up on tobacco and sweets to sell across
Moscow, most of the aluminium kiosks were shut. Merchants could
be seen inside a few frantically relabelling their stocks. Many
of their customers seemed to be milling about in a daze.
"Apollo for 28 roubles? My lord!" said a middle-aged man,
tapping at a box of cigarettes behind the glass at one of the
few operating stalls. "And L&M's for 43! I just bought them for
Restaurants and cafes were printing up fresh menus hiking
prices. Il Pomodoro, an Italian trattoria, drew up new menus
over the weekend and planned to print a whole new set again
before opening on Wednesday.
Many retail shops still had not taken the new rates into
account, making bargains available for those with hard currency,
but these were only likely to last until new stock arrived.
Japanese compact disc players at one electronics shop had
become far cheaper in real terms. But "when they bring us new
goods, there will be new prices," the saleswoman said.
At a nearby pharmacy, imported aspirin was being sold for
the same rouble price as before the plunge, and a bakery was
still asking the same two roubles for a loaf of white bread.
A McDonalds Big Mac was decidedly easier to chew for patrons
with dollars. At 13 roubles it had cost $2.06 last week but was
now only $1.65.
Exchange booths that managed to keep dollars in the till had
queues stretching into the streets of patrons buying dollars for
about 8.5 roubles or selling them for about 7.5.
Before the government effectively devalued the currency last
week, the margin between buying and selling rates on the street
was rarely more than two or three percent.
The freeing of the rouble was the final nail in the coffin
for reformist Prime Minister Sergei Kiriyenko, who was sacked by
President Boris Yeltsin on Sunday and replaced by former premier
Tuesday's 10 percent fall on the Moscow Interbank Currency
Exchange came as commercial banks, permitted by the central bank
to withdraw more rouble reserves to ease a liquidity crunch,
immediately began dumping roubles for dollars.
Russian banks are also nervously awaiting an announcement of
a restructuring of short-term government rouble debt, which is
likely to hurt their balance sheets further.
Suppliers and distributors of consumer goods often clear
debts with each other based on the interbank rate.