Ordinary Russians Suffer Ruble Shock

The ruble is having its worst year since 1998. The selloff began early in the year with the Ukraine conflict, which prompted foreign investors and wealthy Russians to start pulling their money out of the country. International sanctions against Russia over Ukraine triggered more capital flight, and the ruble’s decline picked up speed as the price of oil, Russia’s biggest export, sank. The exchange rate dropped 13 percent, to 46.9 rubles per dollar, from Oct. 18 to Nov. 17, the worst one-month tumble in five years, before recovering slightly in late November. No other major currency in the world has fallen more in 2014 than the ruble—26 percent against the euro and 29 percent against the dollar. The weak currency fuels inflation, now at a three-year high of 8 percent, by driving up import prices.

Rostov-on-Don, a port city of 1.1 million just east of the Ukrainian border, is showing the strain of living with the weak ruble. In southern cities such as Rostov, where wages are lower than in Moscow, electronics stores, apparel shops, and restaurants are emptier, and ads appealing to cash-strapped shoppers are everywhere.