Apple Inc. halted online sales of its products in Russia due to “extreme” ruble fluctuations, showing how the currency’s swings are rippling out to international businesses.
The iPhone and iPad maker stopped sales from its Web store as Russia’s currency lost as much as 19 percent today, with a surprise interest-rate increase failing to stem a run on the currency. The ruble briefly sank beyond 80 per dollar, and bonds and stocks also tumbled.
“Our online store in Russia is currently unavailable while we review pricing,” Alan Hely, a spokesman for the Cupertino, California-based company, wrote in an e-mail today. “We apologize to customers for any inconvenience.”
The selloff in Moscow is spreading across the globe, prompting nervous investors to pull money from other developing nations amid concern that Russia’s financial struggles and the tumble in oil signal a global economic slowdown.
“Anything you earn there now in rubles is going to be coming back to dollars or into euros at very depressed rates, so the bottom line for tech vendors right now should wisely be pulling back from Russia as Apple has done,” said Andrew Bartels, an analyst at Cambridge, Massachusetts-based Forrester Research Inc.
Apple previously had worked to deal with the ruble’s fluctuations in other ways. Last month, the company increased the price of the iPhone 6 by 25 percent in Russia. The online store is Apple’s main direct interface with Russian consumers. While Apple sells smartphones and tablets through some Russian carriers and retailers, the company doesn’t have any of its own stores in the country.
Russia sales make up a small part of Apple’s market for the iPhone 6 and 6 Plus, which were rolled out this year. IPhone sales in the country doubled last year to 1.57 million units, bringing in $1 billion, according to researcher IDC. In total, Apple shipped 153.4 million iPhones in 2013, said IDC.
This year through September, iPhone shipments in Russia rose to 1.9 million, according to IDC.
Until late November, Apple had refrained from increasing iPhone prices in Russia, making the price for an iPhone in the country Europe’s lowest at about $700. That prompted tourists from other countries to buy iPhones in Moscow.
Then Apple boosted the price of an iPhone 6 with 16 gigabytes of storage to 39,990 rubles compared with a previous price of 31,990 rubles, according to Apple’s online store in the country in late November.
Apple closely monitors currencies, with Chief Financial Officer Luca Maestri telling analysts on Oct. 20 that while the strengthening U.S. dollar had little effect on the company’s results during the quarter that ended Sept. 27, it’s “becoming a significant headwind” in the current period.
“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,” he 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.”