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Russian Stores To Stop Accepting U.S. Dollars

December 31, 1993

MOSCOW (AP) _ As of Saturday, most shops will stop accepting what has become the currency of choice in Russia - the American dollar.

The hard currency ban was ordered Thursday by the Central Bank in an effort to strengthen the ruble and help stabilize Russia’s financial system.

Many stores, especially those that sell imported merchandise, now accept dollars, German marks and other foreign currencies. Many refuse rubles.

But under the new regulations they must accept only rubles or credit cards, something few Russians have.

Central Bank spokeswoman Natalia Khomenko said national pride was one of the main motives for the bank’s order.

″No other country in the world allows sales of goods or services for foreign currencies,″ she told The Associated Press.

Inflation has sharply eroded the value of the ruble since prices were freed after the 1991 Soviet collapse, and many people prefer foreign money. Russians who work for foreign companies and joint ventures are often paid in hard currency.

Some store officials say the new regulations may mean higher prices; others say consumers won’t notice any difference.

Larisa Niskina, a manager of a Russian-Swiss-Austrian department store called ″No. 1,″ said her firm has a contract with a commercial bank that will, in effect, turn its checkout stands into currency exchanges.

Customers will pay in hard currency and get change in hard currency, she said.

″What they will not notice is that, in the process, their dollars will be converted into rubles and then back,″ Niskina said.

At another store, however, an accountant said prices may rise as much as 10 percent to make up the losses the store expects to sustain by dealing in rubles.

″We can’t pay our suppliers abroad in rubles, and selling rubles at exchanges means a loss of a part of our profit,″ she said. ″We also expect to lose a lot of clients, mostly foreigners, who now can pay for purchases at our store in 16 currencies.″

Khomenko, the Central Bank spokeswoman, said although stores will only be able to accept rubles or credit cards, they will still be allowed to fix prices in foreign currencies. Credit card transactions can be in hard currency.

Most hard-currency stores only accept rubles at their own exchange rates. These rates are generally higher than the official rate and are designed to discourage ruble customers.

Khomenko said the Central Bank hopes the new regulations will increase demand for rubles, keeping the rate firm.

At the beginning of 1993, the ruble was trading at about 570 to the dollar and it is now trading at about 1,250 rubles to the dollar.

″The regulations are only one measure in a package intended to strengthen the ruble and bring about stabilization of Russia’s financial system,″ she said.

Other measures include tightening customs, export and import regulations, Khomenko said.

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