Kazakh uses toilets to hedge against ruble fallout

Russia has been badly affected by the slide in oil prices, and the ruble has plunged as much of Russia’s economy is based on energy. Photo: Alexander ZemlianichenkoWhen the ruble plunged 37 per cent in the first half of December, Kazakh businessman Marat Mukhamedov spotted an opportunity: Russian toilets. Realising the urinals, tiles and other bathroom accessories he needed to stock the warehouse of his office-refurbishing company were now half the cost of six months earlier, he ordered twice the quantity required for the coming year to take advantage of the exchange rate. “We spent the equivalent of about $US200,000 ($261,491) to double our stock,” Mukhamedov, 37, said from his office at MZ Gesheft in the Kazakh city of Almaty where he’s project manager for the seven-year-old company employing around 50 people. “Now, we have a price advantage against some of the competition.” At a time when President Vladimir Putin’s standoff with the West is slowing the economy and crimping sales at home, Kazakhs — the third biggest net buyers of Russian goods — are boosting orders to benefit from the 41 per cent depreciation that’s made the ruble the worst-performing currency of the past year. Purchases of rubles quadrupled in Kazakhstan in January from a year earlier to total 60 billion rubles ($1.3 billion) for the four months from October, according to data from Kazakhstan’s central bank in Almaty. Russia’s currency rout is part of the reason inflation has spiraled to the highest since 2002. It’s also helping the economy by making Russian goods cheaper to people like Mukhamedov. Even the country’s oil export revenue has remained stable when converted back to rubles despite the 53 per cent collapse of crude in dollars since last year. Samsung phones
Shanghai night field

Bargain-hunting Kazakhs and Belarusians bought about 90,000 of the 500,000 cars sold in Russia in November and December, according to data compiled by PriceWaterhouseCoopers. That’s almost half of the total 182,000 sold domestically in the two countries in all of 2014. Gadgets are crossing the border too. One hundred kilometers from the Kazakh frontier, a unit of Media Markt, the German electronic retailer, has started taking orders online and delivering to Kazakh families. Its Russian stock of Samsung Electronics’s Galaxy Alpha phones were $100 cheaper than in Kazakhstan, according to a price comparison March 13 by Bloomberg. Chronopay上海龙凤419m, an Internet-payments operator, saw turnover from bank cards in former Soviet satellite states double in February compared with October, said Denis Dunyushkin, the company’s spokesman in Moscow. ‘Be patriotic’

President Nursultan Nazarbayev appealed last month for citizens to “be patriotic and buy Kazakh goods.” Yet demand for rubles is still rising in Kazakhstan, Moscow-based VTB Bank’s branch in Almaty said in a March 4 statement. Kazakhs bought almost 22 billion rubles ($470 million) in December and about 17 billion rubles in January, compared with 3.8 billion rubles in January 2014, according to the National Bank of Kazakhstan. “Although the volume of ruble demand from the former Soviet republics isn’t enough to strengthen the currency, it helps to slow down the plunge,” said Anton Tabakh, a director at RusRating, a Moscow-based credit ratings company. The ruble has pared its losses of 2014, climbing 2.1 per cent against the dollar for this year’s seventh-best performance among emerging- market currencies tracked by Bloomberg, The cross-border boost for retailers won’t save Russia from a recession. Gross domestic product may shrink as much as 4 per cent this year, the most since 2009, the central bank said March 13. Retail sales fell 7.7 per cent in February, the most since 2009. Car purchases dropped 38 per cent in Russia last month. Toilet hedge

Heightened Kazakh demand for rubles and Russian goods may also prove short-lived. Russia’s ex-Soviet trading partners are under pressure to stay competitive by devaluing their own currencies. Ukraine’s hryvnia is the worst-performing currency this year amid the conflict with pro-Russian separatists and Belarus is next, sliding 27 per cent against the dollar. By contrast, the tenge is little changed since a 19 per cent devaluation in February 2014. It’s costing Kazakhstan as much as $4 billion a month to keep the exchange rate at around 185 per US dollar as falling oil prices and capital flight put pressure on the tenge, Moody’s Investors Service said in a March 5 report. While Moody’s says a devaluation is unlikely before the country’s presidential election on April 26, futures traders are betting the exchange rate will weaken to 200 within three months and 231 by year-end, data compiled by Bloomberg show. With depreciation looming, Russian toilets provided the perfect solution for Mukhamedov. “We are a little bit hedged against a possible tenge devaluation by being able to save money on the cost of materials for some time,” he said.

Bloomberg

The original release of this article first appeared on the website of Wuxi Plastic Surgery Hospital.