Russia and Egypt report they will soon let go of the dollar, using the rouble and Egyptian pound to trade instead. Rating agency Moody's lowered the credit rating of districts and companies in Russia. Moscow and St Petersburg were among those being downgraded. In Russia, prices increased because of the exchange rate. Idared apples from Serbia are 50% more expensive, and the price for bananas went up by 15% in a week. A supermarket chain therefore decided to freeze the prices of essential foods. In Europe, the export generally doesn't seem to suffer from the boycott. The volumes haven't decreased, although the value is lower.
President Putin (right) with Egyptian president Abdel Fattah el-Sisi (middle) at the state visit earlier this week.
Russia and Egypt let go of dollar
Reports say Russia and Egypt will soon exchange the dollar for the rouble and the Egyptian pound in trade between the two countries. In Egyptian media, president Putin pointed out the advantages of trade in own currencies, such as the absence of exchange rates, direct payments and increased transparency between banks. For the weak rouble, it would be particularly positive if Egypt would use the rouble. But politically speaking, the rapprochement between Egypt and Russia is also important. Egypt has been an ally to the United States for decades. Earlier this week, the Russian president visited his Egyptian colleague. Putin was welcomed to Cairo with open arms.
Rating Moscow and St Petersburg lowered
Credit rating agency Moody's has adjusted the credit rating of Russian regions and companies downwards, with Moscow and St Petersburg now having a Baa3 ranking, one tree above junk status. The agencies' rating is important to be able to get loans on international capital markets. Among others, the interest rate is based on the rating.
Netherlands second trading partner Russia
Despite the boycott and the political tensions, the Netherlands is still second, immediately behind China, on the ranking of most important trading partners to Russia. According to the Russian ambassador in the Netherlands, over the first 10 months of last year, 63 billion dollars' worth of business was done, virtually the same as in 2013. The Netherlands has a share of 9.5% in Russian foreign trade. 80% of the trade consists of energy.
Supermarket freezes prices
Responding to the increasing food prices, Dixy Group, Russia's third retailer, recently announced a price freeze for essential foods. The report came out the day after the announcement that inflation amounted to 15% in January.
Prices Idared +50%
The prices for Serbian Idared apples are 50% higher than last year, according to Russian wholesalers. Prices are between 50-60 roubles (67-80 cents) per kilo. The main cause is the devaluation of the rouble. Since the boycott, Serbia has taken Poland's position as the most important apple supplier.
Bananas have also become a lot more expensive, according to Fruit-Inform. In one week, prices went up by 15% to 76-82 roubles (1.01-1.09 Euro) per kilo. The devaluation of the rouble is one cause, as well as the higher prices in Ecuador due to the change of seasons there. This also means the prices are 2.2 times higher than last year.
Spar in dire straits
Dutch supermarket chain Spar is active on the Russian market, but is in dire straits. The chain is not a discounter, but seeks to distinguish itself with a large product range and service. In Western Siberia, the supermarket is facing tough times, and other chains are ready to take over the stores.
More Polish apples to Kazakhstan
In December 2014, Kazakhstan imported 6000 tonnes of Polish apples, 50% more than in the same month a year earlier. Since the boycott, Poland has invested in export to Kazakhstan. All in all, the country exported 22,000 tonnes of apples between July and December.
Export EU not less, but value decreased
The Russian import ban hasn't, on the whole, lowered the export of fresh fruit and fresh vegetables from the European Union, but the accompanying revenues have clearly gone down, export data from Freshfel Europe show. From August until November 2014, the EU exported a total of 1.77 million tonnes of fresh vegetables and fresh fruit. In the same period a year before, this quantity was still 1.75 million tonnes. While the export to Russia decreased by 90 percent, the export to Serbia and Kazakhstan doubled. To Belarus, 140% more fruit and vegetables were shipped, and the export to Egypt and Macedonia increased by about the same percentage. Jordan increased its imported quantity with no less than 253 percent, but Indonesia took top spot: in the period indicated, the country imported 13,000 tonnes of fruit and vegetables, compared to a mere 910 tonnes a year before. That comes down to an increase of 1332 percent, although the volumes are still small, of course. The value of the export products went down significantly, however. According to Freshfel, the export of fresh vegetables and fresh fruit from the EU reached a total value of 1.29 billion Euro between August and November 2014. A year earlier, this value was 1.52 billion Euro.