Currency volatility redraws Central Europe shopping map

Currency volatility redraws Central Europe shopping map

28th April 2009, Comments 0 comments

As currencies struggle and soar, there is an influx of cross-border shopping trips in Central and Eastern Europe.

Sharp changes in exchange rates in recent weeks are generating a massive increase in cross-border shopping trips by residents of crisis-hit Central and Eastern Europe in search of a good deal.

Towns in northern Poland have become a bargain shopping paradise for Lithuanians after the value of the Polish currency nosedived, while northern Hungary has been flooded by shoppers from new eurozone member Slovakia.

Just 30 kilometres (20 miles) from the Lithuanian border, the Polish town of Suwalki, which has a population of 70,000, is deluged throughout the week.

From the crack of dawn until it gets dark, the majority of cars occupying supermarket parking lots in town bear Lithuanian licence plates.

"I spent about 800 zlotys (176 euros, 230 dollars), for a month's worth of groceries,” says Albertas Zygmantas, a dairy employee in Mariampole, a Lithuanian town some 60 kilometres from Suwalki. “I haven't set foot in a Lithuanian supermarket since February 4, except to buy milk or bread."
Lithuanians load their car after doing their shopping in the border city Polish city of Suwalki on 21 March 2009.

Amid investor panic over the fallout from the crisis in Central and Eastern Europe, the value of the Polish currency, the zloty, plummeted in February to 4.83 zloty to the euro -- a 43-percent loss in value compared to July.

Meanwhile, the value of Lithuania's litas currency has remained stable despite the crisis because it is pegged to the euro, while a value-added tax hike introduced on January 1 has caused a rise in consumer prices.

"The influx began in February,” said Janusz Bobrek, a vendor at the Suwalki market. “Previously, Lithuanians also came, but not in such large numbers. Now they come in entire families and groups."
Polish retailers have begun offering products such as apples and onions in bulk in order to satisfy their Lithuanian clientele.

"Before the devaluation of the zloty, we sold 100-200 kilograms of meat per day, today we sell one to two tonnes per day -- 10 to 20 times more!" poultry vendor Krzysztof Toczko exclaimed with glee.

Attesting to successful sales, he opens up his wallet and pulls out a thick wad of bills. By 10:00 am, he already has a dozen or so 100 lita bills.

His chickens sell for around seven zloty (1.52 euros, 2.00 dollars) apiece compared to 11.49 litas (3.32 euros, 4.50 dollars) in nearby Lithuania.

Due to the economic crisis, Lithuanian insurance company employee Birute Lukosevciene expects a 50 percent salary cut from April.
Shopping trip in Suwalki

She will have just 600 litas (174 euros, 231 dollars) a month to live on and has already been saving money by shopping in Suwalki twice a month for the last two months.

"By doing our shopping here all at once, we can save up to 200 litas," she said.

Lithuanian pensioner Ona Rasikanciene spent 300 litas, or half her monthly pension, during a morning shopping trip to the Suwalki market.

"We come to Poland because we can't survive otherwise,” said the pensioner, her voice charged with emotion. “We take care of our orphaned grandchildren."
But Bobrek the vendor said that judging by their fine cars, most Lithuanians shopping in Poland are far from poor.

"They buy everything in bulk but not to resell it," he said.

A loss for Lithuania

The shopping phenomenon has become a costly one for Lithuanian authorities.

The head of the Lithuanian parliament's public finance committee, Kestutis Glaveckas, said Lithuania was losing about 100 million litas (29 million euros, 38.5 million dollars) per month in tax revenue due to cross-border shopping.

"Business in Lithuania is suffering the most,” said DnB Nord bank economist Indre Genyte, referring to the impact on the retail sector. “And the hope for an economic recovery is pinned on these very businesses."
Selling socks in Vilnius © Nahuel G. Rebollar
Selling socks in Vilnius © Nahuel G. Rebollar

But Oksana Vizguliene, a young Lithuanian mother who travelled 200 kilometres (125 miles) from Vilnius to Suwalki to load up on nappies and baby food said it was only fair that business should move elsewhere.

Said Vizguliene: "If Lithuania can't offer lower prices, then let Poland profit from its good fortune!"

Marielle Vitureau/AFP/Expatica

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