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Signs of sinking ruble in Moscow
Signs of sinking ruble in Moscow
Anastasia Yakoreva

MOSCOW — If you happen to produce widgets in Russia and sell them in foreign currency, your time has come.

Konstantin Babkin, president of a company that produces tractors, is convinced that the ruble should have been devalued long ago. "An excessively strong ruble already killed our airplane construction, food and light manufacturing industries," he says.

Some economists agree that the previous exchange rate of 33 to 35 rubles per dollar was bad for exports. "The disparity between the "real" exchange rate and the official rate is unprecedented, and it is a real barrier for exporters of high-tech products," one observer said in the middle of November. Now the ruble is trading at more than 45 per dollar.

And the exporters are happy. "In the end, our exports have grown by 27% this year," Babkin says. His company exports tractors to Poland, Hungary and Romania, although exports comprise only about 20% of the company's sales. This year, the company sold its first products in Germany.

Babkin thinks that a fair exchange rate would be about 55 rubles per dollar. But exporters would feel a bit more confident if it was readjusted gradually instead of undergoing a free fall. The quick fall the of ruble has made international buyers hesitant about investing in Russian products. After all, if you buy a tractor, you're committing to several years worth of parts and repair services. "What if everything falls apart there tomorrow?" those buyers no doubt ask themselves.

"I have another factory in Canada," Babkin says. "A Hungarian bank was willing to give a farmer a loan for my Canadian combines but not for a Russian tractor."

Babkin says his domestic orders are up by 15% too. "Large agribusinesses have started to buy our machines," he says. "They never even noticed us before."

Sollers, an auto manufacturing company, is also experiencing a booming business. "The devaluation is an excellent opportunity to expand the sales market," a representative from the Sollers press office says. "But that opportunity with be limited within a year or two, so the effect will be less noticeable."

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