Apple Inc. (NASDAQ:AAPL) suspended its online store sales in Russia amid the extreme fluctuations of the Ruble following a sudden interest-rate hike.
In an e-mailed statement to Bloomberg, the iPhone maker’s spokesperson Alan Hely explained, “Our online store in Russia is currently unavailable while we review pricing. We apologize to customers for any inconvenience.”
Apple Inc. (NASDAQ:AAPL) increase the price of its iPhone 6 by 25% in Russia as part of its strategy to resolve the fluctuation of the Ruble currency.
Apple has a comprehensive hedging program
Luca Maestri, the chief financial officer of Apple Inc. (NASDAQ:AAPL) told analysts last October 20 that the company is closely monitoring currency fluctuations and it has a comprehensive hedging program to mitigate the impact of foreign exchange.
According to him, the strengthening U.S. dollar had little impact on September quarter, but it becoming a “significant headwind” for the current quarter.
“It’s a fact of life if the U.S. dollar strengthens, that creates a headwind for us both in revenue and margins for our business outside of the United States. We have a comprehensive hedging program in place that mitigates the impact of foreign exchange. Over time, of course, these hedges roll off and get replaced by new hedges at new spot levels, and so the protection that you get from a hedging program is temporary,” said Maestri.
Apple Inc. (NASDAQ:AAPL) opened its online store for Russian consumers in June last year. The iPhone maker has no retail store in the country.
Ruble plummets after Russia’s interest-rate hike
The Ruble plummeted 19% after Russia surprisingly announced its decision to increase its interest rate from 10.5% to 17%. The move of the Russian government was intended to boost the Ruble and resolve the currency crisis that threatens its economy.
Jean-David Haddad, an emerging market strategist at OTCex Group commented, “I am speechless. What a failure for the central bank.” Haddad added that the policy makers need to consider currency controls as the “last solution” to stop the decline of the Ruble, down 52% this year.
Russia’s Economy Minister Alexei Ulyukayev rejected speculations that the government would implement foreign-exchange restrictions to prevent Russians from converting their money into dollars.
Apple won antitrust lawsuit over iTunes
Separately, Apple Inc. (NASDAQ:AAPL) won an antitrust lawsuit in connection with the security measures it added to the iTunes and iPods in 2006. The jury found that the security measures integrated by the company were “genuine” improvements and it did not violate antitrust laws.
