Economy of The Soviet Union - Foreign Trade and Currency

Foreign Trade and Currency

Largely self-sufficient, the Soviet Union traded little in comparison to its economic strength. However, trade with noncommunist countries increased in the 1970s as the government sought to compensate gaps in domestic production with imports.

In general, fuels, metals, and timber were exported. Machinery, consumer goods, and sometimes grain were imported. In the 1980s trade with the Council for Mutual Economic Assistance (COMECON) member states accounted for about half the country's volume of trade. Although often associated with alcohol production, such as that of vodka, none of these were leading Soviet exports.

The Soviet currency (ruble) was non-convertible after 1932 (when trade in gold-convertible "chervonets", introduced by Lenin in NEP years, was suspended) until the late eighties. It was impossible (both for citizens and state-owned businesses) to freely buy or sell foreign currency even though the "exchange rate" was set and published regularly. Buying or selling foreign currency on a black market was a serious crime until the late eighties. Individuals who were paid from abroad (for example writers whose books were published abroad) normally had to spend their currency in a foreign-currency-only chain of state-owned "Beryozka" ("Birch-tree") stores. Once a free conversion of currency was allowed, the exchange rate plummeted from its official values by almost a factor of 10.

Overall, the banking system was highly centralized and fully controlled by a single state-owned Gosbank, responsive to the fulfillment of the government's economic plans. Soviet banks furnished short-term credit to state-owned enterprises.