Back in mid-March, the dollar exchange rate was 120 rubles, and now it is 62 rubles, and many of our readers are concerned about what is happening and what to do for those who want to save and increase their savings.
Is it urgent to buy dollars, because soon it will again be 120 and even more? Or, on the contrary, urgently sell them, because soon the ruble will strengthen even more?
There is an old joke about two financial analysts. They meet, and one of the other asks: “Listen, what’s going on ?!” Second: “Now I will explain to you …” – “No, I can explain myself. Can you tell me what’s going on?!”
STRENGTHENING THE RUBLE IS NOT FAVORABLE TO ANYONE
And the following happens. First of all, you need to understand that 62 rubles per dollar is the official rate. This is the announced rate, which is very far from the real rate. To see this, try to buy dollars at 62 rubles. You won’t succeed. In reality, in Moscow now you can buy dollars at the rate of 71 to 78 rubles. But this is not easy either.
The fact is that in March the Central Bank introduced restrictions on the circulation of cash currency, and then they began to gradually soften. At first, it was assumed that until the expiration of the temporary order, banks would not sell cash to citizens. But already on April 18, there was an indulgence, and credit organizations were again allowed to sell cash to Russians.
On May 20, the Central Bank again revised the existing measures in the direction of mitigation. Banks were given the opportunity to sell to citizens almost any cash foreign currency without restrictions. Any? Of course not. The exception is still dollars and euros, and restrictions on them will allegedly remain until September 9th. Second, the current strengthening of the ruble is a political moment. Economically, it does not benefit anyone. According to the press secretary of the President of the Russian Federation Dmitry Peskov, “this topic is constantly discussed at the level of the head of state at industry-specific economic meetings that he holds.”
Why did the ruble strengthen? It is clear that because of the currency restrictions of the Central Bank. But not only. It also strengthened due to the fall in imports in Russia. In fact, due to sanctions and problems with logistics, the dollar is not needed now – there is nowhere to spend it, which is why it is losing weight. To make it clear: in April alone, imports fell by 30%, and there has never been such a monthly decline in the history of the new Russia. Plus, the flow of tourists from Russia has sharply decreased, and now people practically do not go to dollar-denominated countries for vacations.
But on the other hand, we continue to develop the export of the same notorious energy carriers, and foreign currency comes for it, and that goes to the budget. Entrepreneur and public figure Dmitry Potapenko argues: “The ruble is a toy that the Russian authorities play as they please, regardless of the real value of the dollar and a barrel of oil. If the price of oil were taken into account, then the dollar exchange rate in Russia would be at the level of 55 rubles.”
But for the Russian budget, a too strong ruble does more harm than good. Here the whole problem is in the conversion. Rubles are needed for the needs of the budget. But before, for 1 dollar received from the export of, for example, our oil, the budget received 120 rubles, and now it is two times less. The Russian budget is “balanced” at the rate of 71 rubles to the dollar, which means that at the rate of 62 rubles, the state receives less revenue and cannot continue like this for a long time. Moreover, now the state needs a lot of rubles to conduct a special operation in Ukraine, which is not cheap. So the current strengthening of the ruble is a temporary phenomenon, and soon the dollar, without any doubt, will begin to win back its positions. And all because the budget of Russia is drawn up in rubles, therefore, simply no one will allow an excessive strengthening of the national currency. Now official experts (for example, from the Higher School of Economics) say that the ideal exchange rate of the ruble against the dollar is in the region of 75-80. Allegedly, such an interval is “favorable both for the budget, and for the population, and for the Russian economy.”
But there are other opinions as well. For example, State Duma deputy Oksana Dmitrieva, Doctor of Economics, believes that “the ruble should have been kept at the level of 80-85 rubles – this would be the equilibrium price of the Russian currency.”
And there is an opinion that now the exchange rate figures are adjusted artificially, and the ruble exchange rate will simply collapse if the market is freed from barriers. Will collapse, to what level?
The Ministry of Economic Development predicts that by the end of the year the dollar will cost an average of 73.5 rubles, and the average rate for the whole of 2022 is expected to be 76.7 rubles. From the agency’s forecast, it follows that by December the dollar and euro exchange rates will rise to 76.4 rubles and 82.5 rubles, respectively.
But there are experts who say that “the dollar can move into the range of 83-100 rubles.” There are those who claim that “there are more chances for the exchange rate to rise to 110 rubles.” But the head of the global research department at Otkritie Research, Mikhail Shulgin, believes that “the ruble will gradually return to a fairly wide corridor from 95 to 105 rubles per dollar.”
Candidate of Economic Sciences and editor-in-chief of the information portal Finversia.ru Jan Art, not without irony, discusses this topic as follows: “The Bank of Russia has once again reduced the key rate by 3 percentage points at once – from 14% to 11%.
And a turning point came: the ruble turned around, crossed the line of 60 rubles per dollar in the opposite direction and went to the levels of 62–65 rubles per dollar.
But then – there is a fork in the scenarios. And not only scenarios, but also “Wishlist”. Those for whom the strengthening ruble has become a symbol shout that this is only a temporary drawdown, and then the ruble will continue its path to hitherto unseen heights.
Those who are economists and generally “put on glasses” either speak directly or do not speak, but they understand perfectly well that 62-65 rubles per dollar is not enough for budgetary needs, and that the ruble will have to be lowered even lower.
And the question arises: how to lower and to what extent?
If you lower the ruble to levels below 70 rubles per dollar, it turns out that not only the ruble exchange rate “turned on the reverse”, but the mood in the (already electrified) Russian society will be the same – the “reverse” of moods will turn on.
Those who “our ruble is flying ahead, there is a stop in the commune” will start shouting about the “liberal conspiracy in the government” and “traitors” who cut off their proud flight. However, this is just a rather harmless occupation – it is just an ideological ritual.
But everyone who used to shout about the fall of the ruble to 200 per dollar will perk up. They have been silent for the last months, but if more than 70 rubles per dollar happened, this “chorus” named “Everything is lost!” immediately act no less powerful than the May frogs after the rain. And, of course, it will affect the financial actions of the Russians …
In general, the situation, if simplified, looks like this. If you go to the left, you will lose the budget. If you go to the right, you will lose social optimism. And at the same time, inflation will raise its head again.”
IS IT WORTH INVESTING IN DOLLARS
What should an ordinary Russian do in these conditions?
Here it is unequivocally impossible to answer, because the Russian is different for the Russian. For those millions of people who have no money at all or barely enough to live on, all these forecasts are not relevant at all. Only those who have something to put aside and have something to try to preserve and increase should think about this topic.
Candidate of Economic Sciences Sergei Nechaev believes that, if possible, you should set aside 10% of your income every month. And it is necessary to store the accumulated in such a proportion: 50% – rubles, 25% – US dollars and 25% – euros.
But how to store?
Sergei Nechaev answers this question as follows: “Money should not just lie there, it should work and multiply itself. More recently, money could be invested in some projects, they could be lent at interest. It was possible to play on the cryptocurrency exchange. Now, for obvious reasons, this is no longer the case. And it is pointless to put money in our banks – interest rates are too low, which do not even cover the level of inflation. What to do? The answer is simple. If money is scarce, do nothing. Better to lay low and wait. If there is money, then it is most reliable to invest it, for example, in the same dollars. But an ordinary person will not be able to earn on exchange rate fluctuations. Investing in dollars is a long game. For example, if you do not need money now, and you want to save and increase it, it is better to buy dollars now at 70 rubles and wait for 100 rubles to be given for a dollar. And it won’t happen today or tomorrow.”
In fact, many Russians at the beginning of the year, when the dollar was growing, ran to buy dollars, and many did so when the exchange rate exceeded 85-90 rubles. What should they do now? Don’t hesitate and wait.
Many, when the dollar fell to 60 rubles, ran in a panic to sell their dollars, thinking that soon there would be 50 rubles, and 40 rubles, and even lower. It didn’t have to be done either. The general rule here looks like this: do not succumb to the panic that the media sows. Being in the ruble zone, that is, making purchases in rubles, you need to understand that buying dollars, in principle, is not the right strategy. Why? Yes, because when buying dollars, a person does it at a rate more expensive than it is set on the currency exchange. If, for example, in two months a person wants to sell his dollars, he will sell them below this rate. That is, on each operation there will inevitably be losses, and the probability of winning a lot will be close to zero.
Financial analyst Jan Art is convinced that the strengthening of the ruble has puzzled almost all economists and financiers. He writes: “For a part of the Russian public, the ruble has become something more than money, it has become a symbol. Not phallic, of course, but almost religious. For some, the strengthening of the ruble was proof that “we are on the right track, comrades!” For others, it is a sign of the return of the Soviet Union, in which the dollar was supposedly worth 60 kopecks. True, the Soviet people never had dollars, but if they had, then – 60 kopecks apiece. The ruble has also become a symbol of the Kremlin’s current politics, especially after US President Biden promised to drop it on the floor.”
So everyone, of course, decides for himself. But the conclusion is very simple: investing in dollars for a short period is pointless. Buying currency is worth doing if it is possible to save money for a long time. For example, for several years.
IS IT WORTH INVESTING IN “EXOTIC” CURRENCIES
People like to talk about the fact that dollars and euros are nonsense, unsecured colored candy wrappers. Whether it’s British pounds or Swiss francs. And recently there has been a lot of talk about the Chinese currency as the best alternative to the dollar and the euro.
Maybe this is so, but let’s see: does an ordinary Russian know what these same pounds, francs and yuan look like? It is safe to say that very few know. And this is a direct path to falling for a scam. The second point: what you invest in must be legal and liquid. You can, for example, invest in the purchase of gold coins. But will you quickly sell them when you urgently need rubles? And most importantly – at what price?
The same is true for “exotic” currencies. They are not so easy to buy, and there are few places where you can safely sell them.
So all this kind of “investment” is not very effective precisely because of their low purely household liquidity.
And, by the way, if anyone doubts, you can see in what currency our state keeps its savings. At the end of June 2021, the Central Bank reported that at that time only 13.1% of its reserves were stored in yuan. But in dollars – 16.4%, and in euros – 32.3%.
IS IT WORTH INVESTING IN GOLD
Recently there was information that since the beginning of the year, Sberbank customers have purchased 10 tons of metal from the bank, including 7 tons of gold. And in 2021, over the same period, customers bought 2.6 tons of precious metals in bullion at Sberbank.
10 tons is an impressive figure, in general, but, in our opinion, there is a feeling that people have an opinion that it is necessary to go into gold, since it is supposedly a cool defensive asset that allows you to save your savings during periods of market uncertainty .
But in practice, gold does not work like that, and those who ran to invest in bullion will soon regret it very much. Returning to the problem of liquidity, we can say that when trying to sell an ingot, there will definitely be a big problem with chemical expertise and its payment. It is difficult to assess the authenticity of gold yourself, and the seller may not have a certificate of authenticity, or it may be fake. Plus, income from such operations is taxed, and when selling an ingot before the expiration of three years of ownership, you will have to pay personal income tax of 13%.
photo: Yuri Kochetkov/EPA/TASS
So – everyone decides for himself, but for those who certainly want to buy gold, I would like to advise you to do it only for collection purposes.
CONCLUSIONS AND OFFERS
Financial analyst Jan Art argues: “We can draw several conclusions from all this.
The first. The peak of the ruble, it seems, is behind us, we will never see 50 rubles per dollar, although they will talk about it for a long time and plentifully, perhaps with saliva. Then they will “find the traitors”, because of whom this did not happen, they will say that they are to blame for everything and, as usual, they will gradually calm down on this.
Second. The ruble is economically objectively destined to return to 70, and possibly to 80 rubles per dollar. But the irony is that now it is not so easy to lower its rate: too much pushes it up.
And the third – you should not get excited, looking at the ruble jumps in the coming days. This is not yet a stable course of the ruble boat – this is just an attempt to find a way out of the winding bay into which the ruble (like all of us) has lately been brought by a difficult … “
And we can only join this assessment.
You shouldn’t get excited. You should not believe TV, because there, on financial and economic topics, mainly those who do not understand anything talk about it. Or they understand, but only say what they are allowed to say. You should not believe those specialists who make forecasts of the ruble exchange rate, because in our country the ruble exchange rate is too politicized and is not formed at all under the influence of market mechanisms.
And if so, everything is simple. If there are extra rubles, it is still better to buy dollars and put them “under the pillow.” If you already have dollars, then it’s better not to “twitch” for now. If you have dollars, but urgently needed rubles, you need to sell – you can’t get anywhere. Well, as for other currencies (including the euro), it makes sense to buy them only when you are going to travel to a country where these currencies are in circulation.