In another damning indictment of Russia’s economic troubles, Apple Inc announced that it is halting online sales in the former Soviet country. The reason given for the decision is the extreme fluctuation in the valuation of the Ruble, which is Russia’s local currency.
The rapid fall of the ruble, coupled with massive spikes in interest rate by the central bank, has forced Apple into a rethink. As all online sales are ultimately reverted to the dollar and euro, Apple realized that it could potentially find itself in a situation where the prices of products would be changing on an hourly basis, and therefore could stand to make massive losses.
In addition to a sales halt, Apple has also been forced to raise app prices by 100%
Analysts have admitted that the Cupertino based company was left with little choice and that it was the right economic decision to halt sales until the currency stabilized. The decision was formally conveyed by Apple in an email sent to its customers in Russia.
Russian economic uncertainty comes at the back of massive falls in the price of crude oil – which contribute to 50% of the country’s revenue. With oil prices at historic lows, there is a real fear that the government will not meet its budgetary targets and be forced to take on expensive foreign loans in order to bridge the gap – loans that it can not afford.
Furthermore, with Russia dragged into a quagmire via its annexation of Crimea and intervention in the Ukraine crisis, analysts fear that the long-term economic outlook is bleak, at best.
Russian economy is suffering due to price drops of crude oil which make up half the country’s revenue
Western sanctions against Russia have also contributed in an overall negative outlook on the country. Many Russian companies, including major trade banks, have been blacklisted from engaging in activities with other companies and Russian assets in the West have been seized. A state of panic is currently engulfing Russian citizens and this latest decision by Apple is likely to deepen the chasm.