Ruble Nears 4,000, Prices Skyrocket

The ruble plummeted 845 points against the dollar Tuesday in its worst one-day drop ever, forcing some stores to close to rewrite price tags as kiosk owners scurried to mark up cigarettes, juice and candy bars several times.

The ruble closed at 3,926 to the dollar on the Moscow Interbank Currency Exchange, down nearly 28 percent from 3,081. The ruble cost of buying a dollar has almost doubled since Sept. 1 when it was pegged at 2,197. (For experts' attempts to explain the crash, see Page 11.)

As the city's merchants scrambled to bring prices in line with the skyrocketing ruble cost of hard-currency imports, and lines wound out of the doors of banks selling dollars at 4,400 rubles -- suddenly a "good" rate -- Muscovites reacted with a mixture of despair, resignation and black humor.

Tamara Ivanovna, whose 105,000-ruble monthly pension was worth $37 last Friday and dwindled Tuesday to $26.74, used one word to describe what the crash meant to her.

"Ruin," she said, refusing to give her last name. "They will raise our pensions, but the prices are rising much faster -- of course it's small change."

"In my office, people are simply in a panic. All the prices are going to double," said Marina, 35, who also refused to give her last name.

Dima Leonov sought to explain to customers why the liter box of orange juice that had sold for 3,000 rubles in his Tverskaya Ulitsa kiosk Tuesday morning cost 3,500 by the afternoon.

He posted the new exchange rate along with a message scrawled in black marker, reading: "S novym kursom! S novym schastyem!" which translates loosely as, "Happy new exchange rate! Happy new happiness!"

"I did it first of all so they would understand, but also as a joke -- it's already taken as a joke," said Leonov, referring to the ruble's fall. He said he had raised the price of a pack of Marlboro three times Tuesday morning, starting at 1,900 rubles and ending at 2,500.

The association of rising prices with the drop in the value of the ruble suggested a change in attitudes since last January. Then, many Muscovites called a 6.8 percent plunge in their dollar-buying power irrelevant because they did not buy that many foreign goods.

It was hard not to notice the inflation Tuesday as Pizza Hut marked up its slices to go from 4,100 to 5,700 rubles. The price of imported candy bars -- the ever-reliable Snickers index, which held steady at around 1,000 rubles during the ruble's slide last week -- hit 1,500 rubles.

Sweet Sweet Way, a candy store on Tverskaya Ulitsa that sells mainly imported goods, was closing down for a special extended lunch break to raise all its prices, deputy manager Olga Barzova said as she shooed out customers.

Directors at the Yeliseyevsky store on Tverskaya Ulitsa said they would not raise prices until they had to buy a new batch of imported goods, but several other store directors interviewed said they would shortly mark up both imported and Russian goods.

Sergei Kuptsov, president of the Russian-German wholesaler Moscow Cash&Carry Mozhaisk, said his company lost 98 percent of its customers Tuesday.

"Customers are saying they cannot afford to buy today, since they do not know what will happen to the ruble tomorrow," he said.

"I think you'll see a downturn in business everywhere in the next few days," said Colm Fitzsimons, a spokesman for the Garden Ring supermarkets which sell mainly imported goods at dollar prices, mostly to Russian clientele. "What we're really worried about is the buying power of our customers."

Fitzsimons said Garden Ring and other former hard-currency stores would likely hold dollar prices steady but raise in-house ruble rates sharply. He said that in the last two days the store took a big loss because it could not exchange its rubles as fast as the rate dropped.

Currency exchanges were buying dollars for 3,200 to 3,900 rubles and selling them at 4,200 to 4,700, with most giving the official rates a wide berth on both sides in case of another sharp fall or a sudden rise in the ruble. Some exchanges closed or refused to sell dollars Tuesday morning. Those that remained open were mobbed by people looking to buy dollars, but that demand fell sharply when their rates leaped in response to the MICEX trading, clerks said. Many exchanges charging over 4,500 rubles per dollar were empty Tuesday afternoon, and many people on line elsewhere said they planned to sell dollars at a profit.

"For me, as a person who was planning to sell a certain amount of dollars today," said Grigory Tsines, 39, while waiting at an exchange point, "it's a pleasant surprise."