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. Last Updated: 07/27/2016

Riding the Ruble Roller-Coaster

Wily as ever, the ruble did its second about-face of the week Friday, rising 23 points against the dollar to continue a roller-coaster ride through the currency markets that has left Russians confused about where it will go next.

Add a monthly inflation of 7 percent to 8 percent driving up prices and a government first backing its national currency, then buying dollars in a cry for stability, and it could be anyone's guess what's happening to the rubles under the mattress.

"It defies understanding what's going on," said Svetlana Anisimova, 36, an accountant who accused the government of political games. The ruble has gained 11 percent in value since the end of April after years of only occasionally interrupted freefall.

During the past week, the ruble has alternately risen 75 points to the dollar Monday, 44 points Tuesday, dropped 16 and 28 points Wednesday and Thursday, respectively, then jumped 23 points again Friday.

The cost of the overall rise has been borne by Muscovites earning or saving in dollars, who are torn between the ruble's profitability today and mistrust of what the government will do tomorrow.

But after years of hoarding dollars the way other nations invest in gold -- an estimated $20 billion or more -- Russians are adapting to the harried pace. The market is maturing, with equities, government bonds and interest-bearing bank accounts available for investment, and the Russian saver is maturing with it.

Still, people now "are a bit lost," said Brigitte Granville, a senior research fellow at the Royal Institute of International Relations. "For years they just had to put their rubles into dollars. Now there are more profitable things for them to do."

What they're doing, experts said, is a combination of purchasing Western goods with high resell values, playing the ruble/dollar rates and putting their money in ruble-denominated accounts.

Many Russians are falling back on durable goods, investing in home appliances and other items that will retain their value regardless of what the currency market does.

A clear sign of this came Wednesday when the Institute for Economic Analysis reported retail turnover had increased 15.3 percent, a trend analysts fear could shoot more rubles into the marketplace and increase inflation. Other savers continue playing the currency game, jumping from dollars to rubles and back again as the market dictates. But increasingly, Russians are calculating their decisions and moving with purpose. With stability, the traditional bank account is playing a greater role.

"I am trying to catch the moment," said Yury Ivanov, a 64-year-old pensioner, sounding more like a 24-year-old New York options trader. Ivanov said that, while the ruble was falling, he bought dollars and purchased some expensive domestic appliances. Now he has sold them and deposited the rubles into a bank account.

At Inkombank and Tveruniversalbank, retail ruble deposits are growing -- by more than 50 percent at Tveruniversalbank, according to Andrei Afanasyev, chief economist with the bank's development department.

Other Russians are taking a different tack. Yulia, a 24-year-old shop assistant at Jacques Dessange boutique on Tverskaya Ulitsa, said she is holding her rubles, anticipating the rate will fall even further in mid-July. Then she'll buy dollars, she said -- and use them for a trip to the Crimea.

"People are looking at the depreciation," said the Royal Institute's Granville. "They behave in a very rational manner because now it's been almost four years, and they are learning."

But rationality depends on certainty, and the ruble's recent contortions have made assurances hard to come by.

After weeks of talking up the ruble, senior government officials changed tack Thursday with Prime Minister Viktor Chernomyrdin and presidential economics aide Alexander Livshits calling for greater stability for the currency.

The Central Bank, after being seen as driving up the national currency, has bought dollars lately to try to curb the ruble's rise.

To Alexander Sizykh, a businessman, policy statements and market intervention were beside the point.

"We are getting robbed twice: The dollar is falling, prices are rising," said Sizykh, standing last in a 10-person queue at a central Moscow exchange office. Other exchanges had run out of rubles, he said, and offered only signs proclaiming "Rublei nyet."

Such chaos will be hard to avoid, even as the Russian market matures, analysts said. While the options available for savings are well-known, no one knows which strategies are gaining the most favor.

If savers merely switch from dollars to rubles, the trillions of rubles printed recently by the Central Bank will stay out of circulation and inflation may remain manageable. But should savers become ruble spenders, inflation is likely to grow. "Right now it's difficult to find out what's happened to all these rubles printed by the Central Bank," said Dirk Willer, an economist with the Center for Economic Performance. "The question is whether the government manages to stabilize these rubles by making savings instruments."

The answer may remain obscure for months, until the actions of Russia's growing middle class can trickle through the system. Until then, Muscovites will continue engaging in the most visible of practices -- venting their fury over the uncertainty toward the government.

"They are trying to gather money for the pre-election campaign by forcing the ruble down artificially," said Natasha, a teller at Menatep Bank. "It [the ruble rate] will fall anyway. We shall have a black Tuesday, or maybe a Black Thursday, but it is inevitable."