RUSSIA: RUSSIANS FORCED TO RETHINK THEIR FOREIGN CURRENCY CHOICE AS THE EURO CONTINUES TO RISE AGAINST THE DOLLAR

Record ID: 646837

  • Title: RUSSIA: RUSSIANS FORCED TO RETHINK THEIR FOREIGN CURRENCY CHOICE AS THE EURO CONTINUES TO RISE AGAINST THE DOLLAR
  • Date: 17th July 2002
  • Summary: MOSCOW, RUSSIA (JULY 17, 2002) (REUTERS) 1. HAS: TRADING FLOOR OF RUSSIAN FOREIGN CURRENCY EXCHANGE MARKET 0.06 2. SV'S: TRADERS (2 SHOTS) 0.18 3. CU/SV: TRADING SCREEN (2 SHOTS) 0.33 4. SCU: (SOUNDBITE) (Russian) OLEG KUZNETSOV, HEAD OF FOREIGN CURRENCY EXCHANGE MARKET PRESS CENTRE, SAYING "As far as our market is concerned, the agitated demand by small buyers for the euro will fall back by autumn and at that time there should be some clarification about the perspectives for the American economy and the European economy." 0.52 5. SV/WS TRADERS/TRADING HALL (2 SHOTS) 1.01 6. CU: MONEY MACHINE COUNTING EURO BILLS 1.04 7. SCU'S: BANK TELLER COUNTING EUROS AND HANDING OUT EURO BILL TO CLIENT (2 SHOTS) 1.21 8. SCU: BOARD SHOWING EXCHANGE RATES 1.29 9. SV/CU: BANK CLIENTS STANDING IN LINE (2 SHOTS) 1.46 10. SCU: (SOUNDBITE) (Russian) KIRA BUROVA, BANK TELLER, SAYING "The rate [of the euro] has not only stabilised but risen in relation to the dollar. People are reacting immediately to this. Over the past 2-3 weeks we have seen a tendency for clients to change their dollar accounts over to euro accounts." 2.09 11. SCU: BANK CLIENT RECEIVING USD BILL FROM AUTOMATIC BANK MACHINE 2.23 12. MV: BANK CLIENTS STANDING IN LINE 2.34 13. SCU/SLV: EXTERIOR OF BANK BUILDING (2 SHOTS) 2.47 14. SV/MV: PEOPLE WALKING OUT OF CURRENCY EXCHANGE BOOTHS (2 SHOTS) 3.02 15. SV: (SOUNDBITE) (Russian) DMITRI, SAYING "The euro has a better future. The dollar will definitely fall and the euro will be the stable foreign currency in Russia." 3.16 16. SCU: (SOUNDBITE) (Russian) VADIM, SAYING "(People will begin to change to the euro) only after it has steadily risen for two or three months." 3.23 17. CU: BOARD SHOWING USD AND EURO EXCHANGE RATES 3.27 18. SV: PEOPLE ENTERING AND EXITING CURRENCY EXCHANGE BOOTH 3.39 Initials Script is copyright Reuters Limited. All rights reserved
  • Embargoed: 1st August 2002 13:00
  • Keywords:
  • Location: MOSCOW, RUSSIA
  • Country: Russia
  • Reuters ID: LVA8N1I47U0UT0F0NKSOE6NAPKGQ
  • Story Text: For over a decade, Russians have bought up US dollars
    as the foreign currency of choice -the favourite bills to save
    or hide under the mattress.

    But a rising Euro and a falling US Dollar is causing
    Russians to rethink their love for the American greenbacks.


    Like dealers around the world, Russian dealers
    watched the euro's course rise on their screens.

    The European currency's rate had risen by 15 per cent since
    April on the Russian market. And on July 16th, for the first
    time since the euro's introduction, it took more rubles to buy
    a euro than it took to buy a dollar.

    Analysts attribute the euro rise in Euro to seasonal
    demand as Russians prepare for European holidays in addition
    to a worldwide drop in the dollar.

    Despite a slight dollar recovery on July 17th, the
    American currency was still frail after seven straight
    sessions of decline in the U.S. blue chip Dow Jones
    industrial average.

    Oleg Kuznetsov, spokesman for Moscow's Foreign Currency
    Exchange Market, said that agitation and uncertainty would
    continue around the Russian market euro until fall.

    "As far as our market is concerned, the agitated demand
    by small buyers for the euro will
    fall back by autumn and at that time there should be some
    clarification about the perspectives for the
    American economy and the European economy," said Kuznetsov.

    A weak dollar causes concern in Russia.

    Russia, the biggest cash dollar holder outside the
    U.S., may have to pay an extra $400 million in debt charges if
    the euro's new-found parity with the dollar lasts until year's
    end, government officials said on Tuesday.

    Analysts said that while the bulk of Russia's exports
    were dollar-denominated, any negative impact from a prolonged
    bout of parity would be small and evened out by gains
    elsewhere.

    Government officials rushed to caution Russians not to
    swap their dollar savings for a strengthening euro but not all
    Russians were taking the state's advice.

    Officials at the Bank of Moscow said that they were
    seeing a run on the euro among their clients.

    "The rate [of the euro] has not only stabilised but
    risen in relation to the dollar. People
    are reacting immediately to this. Over the past 2-3 weeks we
    have seen a tendency for clients to
    change their dollar accounts over to euro accounts," said bank
    teller Kira Burova.

    But currency exchange points across the Russian capital
    reported only a slight rise in
    euro purchases among its clients.

    Ordinary Russians seemed to be divided on whether or not
    to dump the dollar in favour
    of the euro.

    "The euro has a better future. The dollar will
    definitely fall and the euro will be
    the stable foreign currency in Russia," said Dmitri.

    Others were choosing to stick with the American dollar,
    which has been the stable
    currency through years of economic crisis and the standard
    unit for pricing in much of the
    business sector.

    Russians use the dollar for savings and for paying for
    expensive purchases
    like real estate or cars and it is believed that they stash
    $50-70 billion mostly under the matress.

    "[People will begin to change to the euro] only after
    it has steadily risen for two or three months,"
    said Vadim.

    For many Russians, a slowly falling dollar is still a
    stable currency and, for at least now, the
    foreign currency of choice.
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