Russians Turning to The Euro

Russians increasingly favor euros over dollars when exchanging money or withdrawing foreign currency from bank accounts, the Central Bank said.

The demand for euros from individuals, measured by transactions at foreign currency exchange outlets and banks, increased 62 percent in October from the same month last year, the Central Bank said in a statement Thursday. Russians' demand for dollars declined 19 percent in the same period, it said.

The monthly volume of purchases of the euro surpassed 1 billion euros ($1.47 billion) for the first time in October, the Central Bank said. There is a "further change in people's preferences in foreign currency purchases because of a continued drop in the rate of the U.S. dollar," the statement said.

Russians are enjoying a ninth consecutive year of wage growth. Wages increased at an annual rate of more than 10 percent every month this year to a monthly average of 13,540 rubles in October.

The ruble is used for retail purchases. Individuals take out foreign currency when traveling abroad or paying for goods, such as real estate, whose prices are often quoted in a foreign currency.

Even after the dollar lost 34 percent since 2001, the largest investors and most accurate forecasters say it will weaken further as home sales fall and the Federal Reserve cuts interest rates.

The ruble strengthened 7.7 percent against the dollar this year through Dec. 13, according to Bloomberg data.