‘Don’t Panic’ Call as Rouble Tumbles

The rapid depreciation of the Russian rouble (RUB) will be a cause for panic among European businesses with operations in Russian but they should stay calm, says
Philippe Gelis
, chief executive (CEO) and co-founder of business and foreign currency exchange Kantox.

“Such concern is understandable; their profits are likely to be hit by rising prices within Russia and it is becoming increasingly difficult to move money out of the country,” comments Gelis.

“The RUB may well experience a further drop, before stabilising. Nonetheless, European companies needn’t rush to remove all operations from Russia. Despite the upheaval, Russia continues to represent a lucrative opportunity for European companies, with its vast population of 140m people and interest in European products.

“The European companies that are likely to prosper in Russia are those that establish long-term strategies to limit damage, rather than making knee-jerk responses to market developments in panic,” Gelis adds.

“Hedging against RUB risk, while freezing prices to ensure currency risk is not passed onto customers is one way to reduce the damage of the depreciating RUB for European companies. In the longer term, companies with a subsidiary in Russia should consider opening an RUB bank account in their home country to make it easier to process transactions.”

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