c1ue
11-06-08, 09:40 AM
Finally concluded my Q3 deal in Russia.
Our little October surprise cost me 20% of profit as yen/ruble went from 24.5 to 29.5. But I did get paid, and consider the remaining 70% margin to be still acceptable.
Did experience an extra 1 week delay due to some disturbance in the customs clearing area. But got through without a problem (delays were in the customs clearing chain, not my deal).
Customers also were very slow to pay; the chain of payments has been broken at many larger companies where 120 day LOCs are being refused in favor of cash payments. As these are not forthcoming, a number of 'just in time' supply payment schemes have gone under. A number of medium/large retail chains have asked the government to help.
For my own deal, I sacrificed 10% margin to get payment up front.
Pain in the construction side is starting to spread. Several high end design and construction firms are not getting paid by their customers - including one American company - and thus are either eating the losses while paying the employees, or not paying their employees.
There was a bit of a bank run as older people had flashbacks to 1998. But no major banks have failed although interest on deposits is still in the 12% to 14% range. Several small banks were taken over a la Wamu/Wachovia.
Dollar/ruble cross has gone up from 25-ish to 27, but ruble euro has gone down from 36/37 to 34.
Rumors on the street are talking about 40 rubles to dollar, but no one was able to give a coherent reason why. Previous rumors of 27 rubles/dollar did come true (back when ruble/dollar went under 24), but equally back then no one predicted the dollar flight to safety so it appears to be just coincidence.
Sales are still holding up; the hoarders are being offset by those who figure 'spend it or lose it'. Not clear what eventual outcome is but real estate prices have completely run out of steam. Many of those with money are sitting on piles of cash without a clue what to do next.
My 'fruit pie' index continues to rise.
From 2001 - 15 rubles/2 pies, then up to 27 rubles/2 pies in early 2008, is now 45 rubles/2 pies. GRRRRR.
Our little October surprise cost me 20% of profit as yen/ruble went from 24.5 to 29.5. But I did get paid, and consider the remaining 70% margin to be still acceptable.
Did experience an extra 1 week delay due to some disturbance in the customs clearing area. But got through without a problem (delays were in the customs clearing chain, not my deal).
Customers also were very slow to pay; the chain of payments has been broken at many larger companies where 120 day LOCs are being refused in favor of cash payments. As these are not forthcoming, a number of 'just in time' supply payment schemes have gone under. A number of medium/large retail chains have asked the government to help.
For my own deal, I sacrificed 10% margin to get payment up front.
Pain in the construction side is starting to spread. Several high end design and construction firms are not getting paid by their customers - including one American company - and thus are either eating the losses while paying the employees, or not paying their employees.
There was a bit of a bank run as older people had flashbacks to 1998. But no major banks have failed although interest on deposits is still in the 12% to 14% range. Several small banks were taken over a la Wamu/Wachovia.
Dollar/ruble cross has gone up from 25-ish to 27, but ruble euro has gone down from 36/37 to 34.
Rumors on the street are talking about 40 rubles to dollar, but no one was able to give a coherent reason why. Previous rumors of 27 rubles/dollar did come true (back when ruble/dollar went under 24), but equally back then no one predicted the dollar flight to safety so it appears to be just coincidence.
Sales are still holding up; the hoarders are being offset by those who figure 'spend it or lose it'. Not clear what eventual outcome is but real estate prices have completely run out of steam. Many of those with money are sitting on piles of cash without a clue what to do next.
My 'fruit pie' index continues to rise.
From 2001 - 15 rubles/2 pies, then up to 27 rubles/2 pies in early 2008, is now 45 rubles/2 pies. GRRRRR.