Wealthy Russians are snapping up jewelry and luxury goods as the ruble crumbles

• The Russian ruble has crashed to a record low after the invasion of Ukraine as sanctions bite.
• Rich Russians are buying luxury jewelry and watches as stores of value for the floundering currency.

Rich Russians are buying luxury jewelry and watches as the ruble lingers at record lows following sweeping Western sanctions after the invasion of Ukraine.

Sales at LVMH-owned Italian Bulgari have grown in recent days, the jewelry house's CEO Jean-Christophe Babin told Bloomberg.

"In the short term it has probably boosted the business," Babin told the media outlet.

Columbia University's European Institute director Adam Tooze wrote on Monday that people in Moscow were "panic buying" luxury products over the weekend that may have high resale value, as they fear further declines in the ruble after the currency plunged last week right after Russia attacked Ukraine.

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

Babin told Bloomberg that Bulgari is likely to hike prices to compensate for the plunge in the Russian currency. "If the ruble loses half of its value, our costs remain euro costs, we cannot lose money on what we sell, so will have to adapt the prices," said Babin, per Bloomberg.

Gold and jewelry have been traditional stores of value for investors in times of turmoil. The price of gold, a safe haven, has risen more than 5% this year on the spot market. The luxury resale watch market has also been booming, the Business of Fashion reported in January.

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

While Western corporates — like consumer goods giants Apple and Nike — have been fast pulling out or suspending business in Russia, it appears to be largely business as usual for luxury brands, which are not included in European Union sanctions.

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

But it could get more difficult logistically for luxury brands to operate in Russia, as Western countries have removed selected banks from the international SWIFT banking system. The world's largest shipping companies — including Maersk, MSC, and CMA CGM — have also suspended container shipments to and from Russia. Many countries, including the US and those in the European Union, have also closed their airspaces to Russia.

"How long it will last it is difficult to say, because indeed with the SWIFT measures, fully implemented, it might make it difficult if not impossible to export to Russia," Babin told Bloomberg.

Russia accounts for about 5% of the global luxury market, per Vogue Business, citing data from Bernstein Research.

LVMH did not immediately respond to Insider's request for comment.