Apple suspends online sales in Russia amid currency turmoil
"Extreme" swings in the value of the Russian Ruble have caused Apple to temporarily shutter its online store in the Eurasian nation, after a midnight interest rate hike sent the currency plunging nearly 20 percent.
"Our online store in Russia is currently unavailable while we review pricing," Apple public relations representative Alan Hely told Bloomberg. This is Apple's second currency-related move in as many months as the Ruble continues its free fall; the company raised the price of the iPhone 6 in Russia by 25 percent in November.
In the past week, the Ruble has closed as high as 77 and as low as 54 per U.S. dollar after opening 2014 at 32 per dollar. It experienced a dramatic 19 percent decline on Tuesday, after the central bank raised interest rates by 6.5 percentage points in the middle of the night.
"I am speechless," one emerging markets analyst told the publication when asked about the Ruble's slide, going on to call it "a failure for the central bank."
Apple CFO Luca Maestri addressed foreign exchange issues during the company's Q4 2014 earnings call in October, reassuring investors that Apple has anticipated problems with foreign currency fluctuation.
"It's a fact of life if the U.S. dollar strengthens, that creates a headwind for us both in revenue and margins for our business outside of the United States," Maestri said. "We have a comprehensive hedging program in place that mitigates the impact of foreign exchange. Over time, of course, these hedges roll off and get replaced by new hedges at new spot levels, and so the protection that you get from a hedging program is temporary."
Apple's online store in Russia opened in June of last year. It is the only direct sales path for Russian consumers, as there are no brick-and-mortar Apple stores in the country.
"Our online store in Russia is currently unavailable while we review pricing," Apple public relations representative Alan Hely told Bloomberg. This is Apple's second currency-related move in as many months as the Ruble continues its free fall; the company raised the price of the iPhone 6 in Russia by 25 percent in November.
In the past week, the Ruble has closed as high as 77 and as low as 54 per U.S. dollar after opening 2014 at 32 per dollar. It experienced a dramatic 19 percent decline on Tuesday, after the central bank raised interest rates by 6.5 percentage points in the middle of the night.
"I am speechless," one emerging markets analyst told the publication when asked about the Ruble's slide, going on to call it "a failure for the central bank."
Apple CFO Luca Maestri addressed foreign exchange issues during the company's Q4 2014 earnings call in October, reassuring investors that Apple has anticipated problems with foreign currency fluctuation.
"It's a fact of life if the U.S. dollar strengthens, that creates a headwind for us both in revenue and margins for our business outside of the United States," Maestri said. "We have a comprehensive hedging program in place that mitigates the impact of foreign exchange. Over time, of course, these hedges roll off and get replaced by new hedges at new spot levels, and so the protection that you get from a hedging program is temporary."
Apple's online store in Russia opened in June of last year. It is the only direct sales path for Russian consumers, as there are no brick-and-mortar Apple stores in the country.
Comments
I think there is a real danger the CIS (??????????? ??????????? ??????????) could collapse.
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How could this happen? I thought Putin's support, double that of Obama, meant the Russian economy was doing great¡
Should the Russian system collapse, it could be very dangerous. Who knows how much a rogue organization would be willing to pay for missiles from some desperate military workers there? Anyone remember what led up to the Japanese attacking Pearl Harbor? That's right, ruinous economic sanctions enforced against Japan.
Should the Russian system collapse, it could be very dangerous. Who knows how much a rogue organization would be willing to pay for missiles from some desperate government workers there?
Is that any different from the way it's been since the late 1980's?
Thank the Saudis more than the US, their war on oil pricing is going to rock the world.
How could this happen? I thought Putin's support, double that of Obama, meant the Russian economy was doing great¡
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Good!
Apple should obviously raise prices, to reflect the current, correct exchange rate.
Apple should raise prices globally, in all countries that require a change.
...Thank the Saudis more than the US, their war on oil pricing is going to rock the world.
And it already has.
Is that any different from the way it's been since the late 1980's?
Thank the Saudis more than the US, their war on oil pricing is going to rock the world.
Except the Saudis are LOWERING the price of oil in an attempt to gain back market share and to make alternative energy sources seem more expensive in comparison.
Maybe I lack understanding, but I really don't understand the drop in the markets over the last two weeks. I can understand energy stocks dropping but just about everyone else benefits from lower energy prices. Corporations' energy expenses drop, transportation/shipping costs drop and consumers are willing to spend more money because they're not spending it on gas and home heating oil. Besides, my understanding is that only 18% of U.S. oil now comes from the Middle East.
And how much does U.S. companies (Apple aside) sell to Russia?
Except the Saudis are LOWERING the price of oil in an attempt to gain back market share and to make alternative energy sources seem more expensive in comparison.
Maybe I lack understanding, but I really don't understand the drop in the markets over the last two weeks. I can understand energy stocks dropping but just about everyone else benefits from lower energy prices. Corporations' energy expenses drop, transportation/shipping costs drop and consumers are willing to spend more money because they're not spending it on gas and home heating oil. Besides, my understanding is that only 18% of U.S. oil now comes from the Middle East.
And how much does U.S. companies (Apple aside) sell to Russia?
Because all of those middlemen and even countries who've become reliant on artificially inflated gas prices to collect high taxes, skim off additional profits and collect bribes are now caught in a tight spot.
I like that song.
If the collapse of Russia leads to American-owned Kamchatka and Chukotka, I’m fine with that.
Who owns Cthulhu?
Russia's economy is in no danger of and collapse soon, but they are in a recession, and inflation is 9%. The biggest problem for them now, is that they're oil production is inefficient, with equipment that's not up to western standards. With most of their oil now coming from a very northerly Eastern Siberia, the cost of production is high. It's estimated that it costs about $60-65 per barrel. So as oil prices decline to tat level, and they're about at that high now, it will put Russia's oil production in the negative.
A big deal just done with China is expected to be below the price of production already.
As Russia's economy now mostly depends on profitable oil revenue, that will be their major problem going forward. Their problems now are due to both the oil troubles and the sanctions against them from their Ukraine meddling,
Now, the USA is an oil exporter, though I'm not sure how I feel about that. However, were producing almost 3.5 million ballets of oil from shake, and the cost of that is about the same as Russia's oil production cost. So as prices continue to drop our shale production is at risk. If producers cut that back, we will stop exporting, and may even begin some imports again. Hopefully not.
We'll see where our gas abundance goes.
Well, Easter Island proximity, so… he’s probably in Chile’s Exclusive Economic Zone.
Seriously, at the time of the Alaska Purchase, it was also negotiated for the US to take a “99-year lease” for Russia west of 160ºE. Given that this was before the commie revolution, that lease would… not have been returned. I really wish we owned East Alaska.
Except that that's untrue. There's a great new book out about Hirohito. It's called:
Hirohito and the making of modern Japan.
It's a scholarly work of 2000 pages. It shows how Japan evolved, but was formed from late 1880 through the death of Hirohito. A lot of what we "know" is myth. A lot of that myth was fostered by the USA after the war, and the Japanese government. In reality, the sanctions resulted from Japanese aggression, not the other way around.
Oh, I don’t think he was questioning that. We certainly cut off their oil because of what they were already doing, but Pearl Harbor, specifically, happened because of our sanctions.
Correct.
Yes, eventually the world economy will benefit from lower energy prices overall, but if you are an energy producing country, like Russia, Canada, US, Australia, the Middle East, less so and you will go through a world of hurt as your exports don't earn as much. This includes The Saudis, but the kleptocrats that run the place don't mind as they have all the loot anyway and they would just get the imams to blame the great satan to distract their people when they are impacted. They might also hope to make it up in volume;)
As an aside, nobody talks about peak oil these days.
How could this happen? I thought Putin's support, double that of Obama, meant the Russian economy was doing great¡
I think there is a real danger the CIS (??????????? ??????????? ??????????) could collapse.
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Looks like Putin could lose his shirt...again.