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. Last Updated: 07/27/2016

For Foreigners, Dollar Ban Bites

The dollar is dead; long live the dollar.


A ban on hard-currency cash trading in Russia was in effect across the capital Monday, prompting threats of higher prices from retailers and grumbles from customers who braved the slushy streets armed with dollars they could not spend.


"I just spent a half hour looking for an exchange office," said American businessman Daniel Rabib, holding a basket of bread at The Garden Ring Supermarket on Monday. "I shop almost every day and usually pay cash so this is a real inconvenience."


The law, which took effect Saturday, bans the use of hard currency in cash transactions. Credit cards and traveler's checks may still be used to settle accounts, but the rubles-only cash policy was firmly in force at stores, restaurants, hotels and other hard-currency outlets Monday.


Officials in stores said prices would inevitably rise to compensate for the cost of the additional step of exchanging rubles back to dollars to purchase their nondomestic inventory. Many said they would continue to mark their prices in dollars and then pad their internal exchange rate to reflect this extra cost.


This means that the price on a can of peaches at a store or a lobster served at a restaurant may bear last year's dollar price, but will likely cost more at the register as vendors artificially deflate the value of the ruble when the bill is settled.


These rates varied Monday from 1,250 rubles per dollar at the Metropol hotel's Teatro Mediterraneo restaurant to 1,310 rubles per dollar at the Sadko Arcade. On Monday, the official exchange rate was about 1,250 rubles per dollar.


This practice of "rate padding" is illegal, a spokesman for the Central Bank said in an interview last week.


Stores using the mechanism declined to comment Monday.


The accountant for The Garden Ring Supermarket, who requested that his name be withheld, said prices at the busy city center store would rise as new goods replaced those already marked. A store employee said that an exchange bureau was planned for inside the store.


The store manager at Video Force, an English-language tape rental store at the Mezhdunarodnaya Hotel with a client base that is 70-80 percent foreigners, said the ban was harmful to business.


"We are losing customers," said Marina Yekushina. "Our customers are far from content with this."


She said that the store had required a $50 deposit on tapes, but now was less when we give it back to them," she said. "They don't want to deal with us."


She said that the price of a tape rental was marked up 10 percent because of the ban.


Many retailers and customers said they were prepared for the change.


"It's good for Russia," said deputy manager Nikolai Golovin of the Teatro Mediterraneo restaurant. A second deputy manager said the only inconvenience was that many diners had to cross the hotel to change money at an exchange office in the opposite wing .


"Some customers are not happy, but I think most already knew and prepared themselves," said Valentina Semicheva, a stocker at Intercar's Colognia grocery store. "People have been talking about this for six months."


That was little comfort for Yuan Huan Ok, a South Korean shopper at the Colognia supermarket on Monday.


"I don't know what's going on," he said. "It's a big problem for me. Stores are setting their own rates; it's so funny! I've never heard of such a thing."