Russians ditch dollar for euro

ChrisD(RJ) chrisd at russiajournal.com
Thu Mar 20 01:13:27 PST 2003


DoreneFC at aol.com wrote:

I haven't not been to Russia in 4 years. At the time there were exchange booths all over the place in Saint Petersburg. Since this was pre-Euro, the most frequently posted rates, in addition to the dollar where Deutsch marks,

Pounds sterling, and Finnmarks, and sometimes Francs (Swiss or French, depending). -- When I first was in Moscow in Spring 2000, it was dollars and Deutschmarks, though the big banks (like Sperbank) would also list many other currencies. ---

In Ufa, things were a little more spotty, concentrated mainly in the middle of downtown. As I remember the rate were posted mainly in dollars or pounds.

Also prices for everyday goods were posted in rubles, oddly enough either in

old rubles or in new rubles minus about 3 0's from that year's devaluation. We didn't exactly go car shopping. So a relevant question is, outside of the

capitals, how much does the exchange rate matter?

--- I would say it doesn't matter much. It matters to big business and the middle class, which is paid in dollars and concentrated almost entirely in the big cities. Moscow has a large middle class (maybe 30-40% of the population), Petersburg 20% or so, 10-15% in other cities. Everybody else is paid in rubles (or, in the past, barter).

The Moscow/regions dichotomy (everything that's not Moscow is part of the "regions") is quite striking. Moscow and Moscow Region have 60% of Russia's money, literally. That means 10% of the population has 60% of the cash. Accordigly, there is massive internal migration to Moscow, including a brain drain. Everybody who can goes to Moscow. Very bad for the regions.

---

Also I think it's a chicken and egg question: is the exchange rate better because more Russians want to buy the currency (say as a vote about something to do with Iraq) or do Russians want to buy the currency because the exchange rate is better?

--- The Russian middle class is too concerned with themselves to protest against Iraq. They're quite politically apathetic. They're the kings of the heap, after all.



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