Wednesday, December 17, 2014

Apple Stops Online Sales in Russia Over Ruble Fluctuations

Apple on Tuesday halted online sales of its products in Russia due to “extreme” ruble fluctuations, according to Bloomberg.

This seems a bit strange to me.

Chief Financial Officer Luca Maestri told analysts on Oct. 20:
We have a comprehensive hedging program in place that mitigates the impact of foreign exchange. 
So is this true or not?

If sales are hedged then the declining ruble wouldn't matter---and you boost prices for future sales.

I am inclined to think that it is market forces that have been pushing the ruble down, but it is news like this that causes me to pay more attention to those who hold the view that the US is muscling the ruble down.

Among them is former Assistant Treasury Secretary Paul Craig Roberts who says of the ruble collapse:
This is not some independent action of market forces.  So, it’s either hedge funds, currency speculators like Soros, or it’s an Act of War on behalf of the United States government by the Federal Reserve or the Exchange Stabilization Fund. . . or possibly both hedge funds working with the federal government.
I'm still sticking to the view that it is market forces that are pushing the ruble down (And Apple wasn't as hedged as they said they were), BUT, as I have pointed out, Bank of Russia chair Elvira Nabiullina appears to be making difficult but sound decisions (SEE: Elvira Nabiullina: Central Banker of the Year), so if the ruble doesn't stabilize soon with these moves then I am going to be paying a lot more attention to PCR.


  1. Perhaps Elvira was prepared to act because they knew how the threat against them would be carried out when they cancelled southstream

  2. There's hedging and then there's hedging. Apple was probably well-shielded against a 5% or 10% drop, but even a company like Apple can't profitably hedge against this kind of market. Their best bet is to pull their product out and wait for the market to stabilize.

    When given the choice between active action and happy circumstance, I'll go with the latter every time. I think the Arab peninsula powers (Saudi Arabia, UAE, etc.) saw an opportunity to quickly (and somewhat cheaply) hurt all their major enemies (ISIS, Russia, the oil sands / shale oil companies, etc.), so they grabbed the falling knife of oil prices and stabbed with it. The sharks then smelled blood and piled on. As the Bank of England learned taking on Soros, et. al., when you're counter to the prevailing winds, even a central bank can lose.