According to reporters at Bloomberg, Apple is shutting down its online sales to Russia because of the "extreme fluctuations" in its currency, the ruble. Over the last twelve months the value of the ruble has plunged more than 50 percent against the dollar, destabilizing the Russian economy. That drop was already making it difficult for ordinary Russian citizens to purchase imported goods, but Apple's move shows things may get far worse, as foreign companies decide to stop accepting a currency that has been rapidly shedding value with each passing week.
There are three major factors contributing to the broader collapse of the Russian economy, which in turn is hurting the ruble. The drop in the price of oil has hurt it badly, as the energy sector was the biggest driver of foreign capital into Russia. Western economic sanctions applied in response to the invasion of Crimea and dispute over Eastern Ukraine have also done damage. Finally, many Russian citizens, especially those with wealth, have lost confidence in the country's future. $100 billion in capital is expected to leave the country this year.
In recent weeks, Russian President Vladimir Putin has taken drastic action to try and reverse the economy's course. He pumped money from the country's sovereign wealth fund into banks to help them avoid default on loans that, with the collapse of the ruble, have become increasingly expensive to repay. And last night Russia instituted a dramatic interest rate hike, a last ditch effort that seems to have done little to prop up its ailing currency.
The departure of Apple, an extremely high profile global brand, will no doubt add more fuel to the fire. "We are seeing an economic crisis," Natalia V. Akindinova, a professor at the Higher School of Economics, told The New York Times. "We are seeing a sharp devaluation of the ruble at a time when the central bank doesn’t have the reserves to influence the market, as it did in the past crises."
Russia had been one of Apple's most exciting prospects, an emerging market with a class of very wealthy citizens. Right now, however, the ruble is simply to volatile to trust. We have reached out to Apple for comment.