Narvans flee dollar drop

  • 2002-07-11
  • Sergei Stepanov

Narva residents are crossing the Estonian-Russian border for bargains, experts believe, thanks to stronger euro.

As the euro gains against the dollar, the kroon is gaining as well, resulting in lower prices on a variety of goods for Estonians because the kroon is pegged to the euro.

On July 8, 1 Russian ruble was worth about 50 Estonian cents ($0.03), down from the normal range of 65 cents - 70 cents in June.

Queues clogging the border crossing between Narva and its Russian sister city Ivangorod have backed up traffic, as Estonians scurry to buy liters of high-quality Russian vodka at 50 kroons a pop, or less than half the average price for vodka in Estonia. The same Russian vodka went for roughly 70 kroons a month ago.

Many Narva residents have special visas that allow for simplified border crossings to Ivangorod because of family connections. The Estonian-Russian border, which runs down the middle of town, split the city in two when the Soviet Union collapsed.

A similar boom at the border took place in 1998 after Russia devalued the ruble.

But while consumers are thrilled, businesses that work with Russian partners and receive payments in rubles say they are suffering huge losses thanks to the weaker ruble.

"We're losing 1,500 kroons on every 10,000 rubles we exchange," said Aleksei Stepanov of the Narva-based Infotec transport company.

It is still common to keep savings in dollars, but Narvans are not rushing to get rid of them. Fyodor Ovsyannikov, who works at a local currency exchange outlet, said there had been no discernible growth in dollar sales.