St. Petersburg, 11 September 1998 (RFE/RL) --Russia is often said to be a country that goes from one extreme to the other. This week, the country's currency did exactly that.
In a reversal of recent weeks' panicky dumping of the ruble, Russians across the country were lining up to sell dollars for rubles, as the nation's currency suddenly bounced back against the dollar. After losing 71 percent of its value since August 17, yesterday the currency was up 65 percent of its value from only three days ago.
Currency trading volumes on the Moscow Interbank Currency Exchange on Thursday were a low $40 million, making the market even more volatile. A speculator changing one million dollars could affect the exchange rate by 10 percent, analysts said.
The scenes the last two days in St. Petersburg and elsewhere in Russia were a mirror image of those seen over the past two weeks, when individual Russians and Russian banks had been rushing to buy U.S. dollars. But this time they were buying rubles.
Needing to pay for suddenly expensive products in rubles they had earlier changed to dollars, the citizens of St. Petersburg were finding it necessary to buy those rubles with greenbacks.
Inflation in August was 15 percent but consumer prices rose 35.7 percent in the first week of September, according to Goskomstat, the official statistic agency.
"We have to sell our dollars because prices are now high for goods and we have no more rubles," said three women in chorus as they stood in a line of 30 outside a Baltiysky Bank exchange office in the city center.
Like many other banks around town, the Baltiysky exchange booth had a shortage of rubles, whereas two days ago it had no dollars.
At a Sberbank branch some people, in a line of 20, said they had been waiting for over four hours because the bank had no rubles. Many wanting to change just walked away in exasperation by the wait.
"The government and banks are playing a game with the fluctuation of the ruble," said one angry man on the line. "They are trying to steal the people's money."
According to Leonid Abalkin, director of the Russian Academy of Science's Institute of Economics and one of Russia's leading economists, individual Russians now have $30 billion and 129 billion rubles in cash in their possession. Another $10 billion dollars in cash is circulating in the "shuttle-trade," whereby individual Russians import goods.
While many rank-and-file citizens immediately suspected a bankers' conspiracy behind the ruble's rapid mood swings, bankers and analysts point to more natural economic phenomenon.
"A conspiracy is nonsense in explaining the ruble's sudden rise," Alexei Bukleyev, a currency trader at Alfa-Bank in Moscow, told RFE/RL.
While admitting that manipulation of the currency markets is possible, he added that, "the crux of the matter is that people and banks need rubles to pay bills, so they are selling their dollars."
As far as the future, some economists think that the ruble will not end up as battered as feared earlier this week.
"I would say that the economic fundamentals support an exchange rate of about 10 rubles to the dollar," Pavel Teplukhin, President of Troika Dialogue Asset Management in Moscow, told RFE/RL. "But the exchange rate will remain volatile and react to every rumor and announcement until we get a government and until the time when that new government unveils its economic program."
Whatever the ruble exchange rate will be, Russian consumers are now facing great hardship as prices on many goods have risen from between 20 and 100 percent, while salaries and pensions have remained the same. Not to mention that companies are laying people off and cutting salaries.
Now with almost no imports coming into the country, some store shelves have been left bare while others are stocked with higher-priced goods that few people can afford.
Though the assortment of food has declined drastically and many shelves are bare, government officials say there is no need to fear famine as the winter approaches.
"Importers will not give up their position on the Russian market and are waiting to come back into Russia as soon as the situation stabilizes," a cargo clearance expert for a Russian import company told RFE/RL.
But the St. Petersburg city administration has already embarked on a program designed to increase the supply of food staples from Russia's agricultural regions.