Apple Halts Online Selling in Russia as “Rublegeddon” Sets in

Yesterday, we reported on Russia’s surprise rate hike to 17 percent. They are fighting what some analysts are terming “rublegeddon” as the value of their currency is tanking and inflation is setting in. This will also affect corporations, especially those not based in Russia, who are selling products to the Russian population.

Apple, Inc. (AAPL: Nasdaq) has just announced they are halting online sales in Russia due the extreme volatility in the Russian Ruble. Apple released a statement  that said they made this decision “due to extreme fluctuations” in Russia’s currency. They are not sure how long it will take for them to adjust prices as the ruble falls and for now online sales are not possible. After the announcement shares of Apple lost more than one percent to close at 106.75.

The fall of the ruble is making the price of the iPhone cheap in Russia. Apple closed online stores last month, in Russia, to raise the price of the iPhone more than 25 percent. Now they are shutting online sales till they can get a grasp on how to price their products. The Ruble fell sharply after Tuesday’s rate decision and today the USD/RBL is down more than 1.5 percent in early Asian trading.

So far, the decision to raise rates, has failed to stabilize their currency. Since January, the ruble has lost sixty percent of its value thanks to Western sanctions and the falling crude oil prices. Oil is Russia’s largest export. Thanks to this enormous volatility, it is making it very hard for companies, like Apple, to set prices thanks to the difficulty to gauge conversion rates. This recent, massive rate hike by Moscow, underscores their concern over the severity of the crisis.

There is more of a problem than just fundamentals. There is no questions that the fundamentals with the Russian economy are weak but there is now a massive loss of confidence in their currency. There is also a loss of trust with Russian officials and their ability to control what is going on, or fix the problem. Their central bank is facing a crisis of isolation. Thanks to this they will find it nearly impossible to convince investors that it has the firepower needed to stop the run on the ruble. At this point, not even a recovery with oil prices will help, not that looks like the price of crude will recover in the near term.