Wealthy Russians buy jewelry, luxury goods, while the ruble collapses

• The Russian ruble has fallen to a record low since the invasion of Ukraine as sanctions bite.
• Wealthy Russians are buying luxury jewelry and watches as a repository for the crumbling currency.
• Bulgari, owned by LVMH, said Bloomberg’s sales have increased in recent days.

Wealthy Russians are buying luxury jewelry and watches, while the ruble remains at record lows after extensive Western sanctions following the invasion of Ukraine.

Sales at Italy’s Bulgari, owned by LVMH, have risen in recent days, Jean-Christophe Babin, the jewelry company’s chief executive, told Bloomberg.

“In the short term, this has probably stimulated business,” Babin told the media.

Adam Tuz, director of the European Institute at Columbia University, wrote on Monday that people in Moscow were “panicking” into buying luxury products over the weekend, which could have high resale value as they fear a further devaluation of the ruble after the currency fell last week just after Russia’s attack on Ukraine.

The rolls extended the decline by another 30% on Monday.

Babin told Bloomberg that Bulgari is likely to raise prices to offset the fall in the Russian currency. “If the ruble loses half its value, our costs remain in euros, we can’t lose money from what we sell, so we will have to adjust prices,” Babin told Bloomberg.

Gold and jewelry are traditional repositories of value to investors in times of turmoil. The price of gold, a safe haven, has risen by more than 5% this year on the spot market. The market for the resale of luxury watches is also booming, Business of Fashion reported in January.

In recent months, imported luxury items have been in demand by those affected by currency fluctuations. In Turkey, where the pound has lost more than half its value against the dollar since 2020, people are buying high-end electronics such as Apple products as a means of storing value, Reuters reported in November.

While Western corporations – such as consumer goods giants Apple and Nike – are rapidly withdrawing or shutting down business in Russia, this seems to be largely the case for luxury brands that are not covered by European Union sanctions.

“We are there for the Russian people, not for the political world,” Babin told Bloomberg. “We operate in many different countries that have periods of uncertainty and tension.”

But it may be more difficult for luxury brands to operate logistically in Russia, as Western countries have removed selected banks from the international banking system SWIFT. The world’s largest shipping companies – including Maersk, MSC and CMA CGM – have also stopped shipping to and from Russia. Many countries, including the United States and the European Union, have also closed their airspace to Russia.

“It is difficult to say how long this will last, because indeed, with SWIFT measures fully implemented, this could make it difficult, if not impossible, to export to Russia,” Babin told Bloomberg.