What to do with savings during devaluation. Where to invest rubles during the crisis and devaluation. Historical examples of devaluation processes in Russia
Many people are afraid and therefore make mistakes. If you calmly think over your actions, you can significantly reduce the losses from devaluation.
The fear of our compatriots before the devaluation is easily explained. Russians remember well the devaluation of 1998, which was accompanied by government debt, the collapse of the largest banks and the loss of their savings by depositors. A smoother devaluation in 2008 also caused a serious "thinning" of many savings in dollar terms. The events of December 2014 and the end of 2015 added black colors, when the ongoing devaluation, which took place against the backdrop of a permanent devaluation, became associated with a noticeable drop in living standards. This is where you get to thinking.
In fact, there is nothing wrong with devaluation in and of itself. For example, in the early 2000s, many Europeans were only happy that the euro against the dollar was falling rapidly. The logic here is simple: the cheaper euro increases the competition of European goods, which leads to the emergence of new jobs, economic growth and incomes of citizens.
In Russia, the situation in this aspect is very different. Our economy is significantly skewed towards the oil and gas sector. The production of goods for the population is much worse developed: almost all household appliances are imported, clothes are largely the same, the share of imports in the food products sector is also very high. Therefore, the devaluation of the ruble leads to higher prices in the consumer market; real incomes of citizens are falling, against the background of a declining standard of living, savings are depreciating (since their purchasing power is decreasing).
With all of the above, devaluation does not guarantee either economic growth, no compensation in the form of an increase in at least ruble income. This is explained precisely by the fact that the domestic economy is focused to a large extent on the distribution of oil and gas rent, rather than on the production of goods that are competitive on global markets.
Nevertheless, one should not be afraid of devaluation. First, fear is generally a bad adviser. And secondly, it is unlikely that you personally can influence the situation in the Russian economy or the ruble exchange rate (unless, of course, you are a minister or head of the Central Bank).
And most importantly, over the past 20 years we have experienced at least four significant waves of devaluation, which allows us to draw certain conclusions and form the right course of action. There is nothing original in the proposed recipes. We just want to remind you of the "rake" that our citizens love to step on in every new crisis.
The experience of all previous devaluations irrefutably testifies: if people massively rushed to buy currency in exchangers, then almost certainly they are already too late and there is no point in their actions. In such a situation, there is a very high probability of buying euros or dollars at the very peak of the price, after which their rates will begin to decline. In moments of rush demand, exchange offices also artificially inflate the price of the currency, which will lead you to additional losses.
Often, Russians keep their savings in rubles, hoping to convert them into foreign currency if necessary. But how to make such a translation? In 1998, the choice was small: an exchanger or a bank conversion from a ruble account to a foreign currency one. The second option took a lot of time and nerves (due to the unstable situation of many banks). Since then there have been major changes.
Most large banks offer, which allow you to instantly change the deposit currency without losing interest. You can do this via the Internet. Not so long ago, individuals got the opportunity, which allows them to carry out the conversion at the most favorable rate at a particular moment. To do this, you need to open an exchange account. It is not at all necessary to keep money on it all the time, however, if necessary, you can transfer the appropriate amount to it at any time and buy the required amount of currency.
The advice to lay eggs in different baskets is as old as the world. Both representatives of the Russian economic authorities and independent experts have repeatedly said that it is better to keep savings in different currencies. At the same time, the process of de-dollarization of savings, which began in the 2000s, is still underway. Today, the share of foreign currency deposits in the total amount of deposits is not very large - about 30%, and these figures probably need to be adjusted. Mostly, the owners of large fortunes keep their money in foreign currency, who aim to save their savings rather than earn on interest. But ordinary citizens, first of all, pay attention to the size of interest rates, which are much higher on ruble deposits. Such investors completely forget about the existence of devaluation risks.
If you keep all your savings in rubles, it is worth spending a couple of hours and seeing what would happen if you kept at least a third of your funds in foreign currency. You may be surprised by the result. In any case, the time spent will pay off: you will understand exactly how the mechanism functions. This will allow you to invest your money more consciously in the future, without chasing only the highest percentage.
Many similar recipes can be given. For example, there are financial market instruments: both currency and ruble. Instead of opening a deposit in a large bank, you can consider purchasing bonds of this financial organization. Funds on deposits are protected by the deposit insurance system, but bonds provide much more income. It is hardly necessary to expect the collapse of a large state-owned bank in the next few years.
However, such recipes are already for more “advanced” investors who want to understand the intricacies financial markets. But here are some simple steps that anyone can take to reduce losses in the event of inflation. To do this, you just need to not be lazy and work a little with your head. Therefore, much more dangerous than the devaluation of the ruble is the “devaluation” of thinking.
The devaluation of the ruble, which has been steadily observed for the last quarter of a century, indicates that something is wrong in the country's economy. Large territories, huge resources, a powerful industry, technologies that allow launching spacecraft into space, building an advanced military equipment- Russia had and has all this. But there is no strong, stable currency that would allow the population not to keep savings in dollars and euros. Or does it just seem so?
The end of each calendar year is accompanied by a large number of forecasts for the coming calendar year. Among them, one of the first questions is about national and foreign currencies. Will there be a devaluation of the ruble in 2019? This is exactly what the topics of interviews with well-known specialists in the field of finance sounded like in November-December 2018. There is a problem, the process itself, which can comprehend the national monetary unit of Russia, excites citizens, and this is not accidental.
What is ruble devaluation? If you explain what it is in simple words, then this is the depreciation of the national currency in relation to other currencies and to the value of gold. For comparison, world currencies are taken, among which are not only the dollar and the euro, but more than 1.5 dozen monetary units of other states.
What does devaluation mean, if explained plain language? As a result of some political and economic processes, the demand for a particular currency is falling, which is why the exchange rate of other currencies in relation to it rises. But it can also be the other way around, when the demand for other currencies grows, as a result of which their exchange rate rises, which means that the ruble exchange rate falls against this background.
The reverse phenomenon, in which the currency rises, is called revaluation. For example, in the first half of 2018, it was the revaluation of the ruble that was observed. At the same time, the dollar exchange rate fell from 70 rubles. for $1 to 56 for $1.
But following the revaluation of the ruble in 2018, devaluation began, which led to the exchange rate of 65 rubles. for $1 and above, which showed a devaluation percentage of 15%. The exchange rate of the ruble against world currencies has fallen sharply.
Over the past 100 years, the rate of the domestic monetary unit has greatly devalued. If it were not for its periodic denomination, in the current century, Russian citizens would use bills of billions and trillions of rubles. The denomination was held in 1922, 1947, 1961 and 1998.
When the last denomination was carried out, 1000 old rubles were equal to 1 new one.
It was held in January 1998 after some stabilization of the economic situation, but the crisis of 1998 again forced the ruble to fall, the positive forecast a year ago did not come true.
What does the course depend on?
The reasons for what is happening must be sought not in conspiracy plots, but in the laws of economics. Countries like the USA, Japan, Germany, France, Great Britain have very strong economies. They are less dependent on the export of raw materials than Russia.
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On the other hand, it must be taken into account that Russia is not a raw material appendage for Western countries either. In the structure of its GDP, only 30% is accounted for by exports. Less than 30% of their total exports are for the sale of petroleum products, and about 10% for gas exports. Thus, less than 10% of the GDP of the Russian Federation is the export of oil and oil products.
In addition, Russia is the world's second (after the United States) exporter of arms, is engaged in the sale of high-tech goods (the same engines for US launch vehicles) and services. But even such a non-total dependence on the sale of black gold still greatly affects the stability of the national currency.
Other developed countries are more dependent on the export of services and high-tech goods. For example, Great Britain occupies 10% of the entire world market of services. This is a very powerful and strong economy, which, after the implementation of the intention to withdraw London from the EU, can be further developed.
Over half of the UK's exports go to the EU. This means that the British trade with countries with high purchasing power, in which high level consumption. Such exports bring high incomes to the exporting country, since goods with high added value are sold.
The UK is taken as an example, but the situation is similar in other developed countries. The structure of their exports mainly consists of industrial goods with high added value. This means that in the event of fluctuations in the cost of raw materials, the exporters of these countries suffer to a lesser extent, especially in the near future.
If they begin to incur losses as a result of falling world prices for raw materials, then only in the medium and long term. And this is provided that prices continue to fall or remain at a low level.
A whole chain of events is launched, namely:
- Low commodity prices reduce the income of hydrocarbon exporters.
- The decrease in income leads to the freezing of large projects.
- The freezing of large projects sharply reduces the prices for steel, grain, and ore.
As a result, export earnings are falling. a large number countries and not only those that supply oil. Trade in other raw materials is fading. Gradually, this leads to a decrease in demand for high-tech goods.
Mercedes and Audi are already buying less, and this is forcing manufacturing companies to reduce or stop production of cars. The reasons for such measures are that all countries have already felt the fall in the cost of hydrocarbons.
But until Germany or the UK begins to experience these negative phenomena, the direct exporters of black gold are affected by these phenomena from the very first day. The national currency of these countries begins to stagger under the influence of some kind of expectations or rumors.
That is why the fall in oil prices ultimately negatively affects the economies of all countries, including the EU and the US, but it is the ruble that depreciates against the euro and the dollar, and not vice versa. This is the real reason for the devaluation of the ruble in Russia.
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Who benefits from currency depreciation?
But there is also a national regulator represented by the Central Bank of the Russian Federation. Why doesn't it include all the tools and levers to maintain the rate of the domestic currency? And again, any conspiracy theories that claim that agents of influence from the State Department have settled in the Russian Central Bank should be discarded.
There is a completely economic explanation for these phenomena, including what threatens devaluation or its absence.
If the prices of export goods rise, the consequences are that more foreign exchange enters the country. For settlements with the state, with workers, with utilities, domestic currency is needed. Therefore, the exporter is forced to exchange foreign exchange earnings (part of it) for the national currency. A lot of currency enters the domestic market, the demand for it falls, it devalues, the ruble strengthens and increases its value.
This happened when oil prices were rising - this happened until mid-2008 and 2014. But in both cases, the pessimistic forecast came true, the cost of hydrocarbons fell many times, forcing the ruble to devalue. In this situation, the country began to receive less currency. What does this mean?
If the country receives less currency, in terms of it, the exporter will pay less deductions to the budget. Moreover, if the wage fund, rent of premises, utility costs remain on the same level he may suffer losses.
As a result, the enterprise will become bankrupt, close, an additional number of unemployed will form, consumer demand within the country will fall, triggering a crisis of overproduction.
There will be goods in warehouses, but there is no one to buy them. Such consequences trigger a new round of shutdowns of enterprises and reductions, which will further aggravate the situation, a new devaluation of the ruble will begin, stimulating an even greater crisis.
It is precisely the devaluation of the national currency that can save us from this. Since the exporter with the state, employees and utilities is calculated in rubles, the devaluation allows him to receive the same money supply in terms of the domestic currency, even with less revenue in dollars or euros.
Until mid-2014, the sale of 1 barrel of oil earned 115 dollars, which, at a rate of 31 rubles. $1 was enough for salary and taxes. So that even with the price of 1 barrel of oil at $ 50-70, the proceeds will continue to be enough for salaries and taxes, the dollar exchange rate should be higher.
The effect of the devaluation of the ruble is such that everyone wins in this situation.
The state budget receives the expected revenues, state employees and pensioners receive salaries and pensions on time, export does not dismiss workers, they receive a salary, the enterprise does not close and continues to operate.
As a result, the fall in purchasing power in the country is reflected only in imported goods, because they rise in price sharply when the ruble falls.
The devaluation of the ruble is also beneficial for domestic producers, whose goods become more competitive with respect to imported counterparts.
Own production in Russia begins to grow, which has a positive effect on the country's economy. And this stops the fall of the ruble, strengthens it.
This is the answer to the question of who benefits from the devaluation of the ruble. But there will also be victims, especially those who have a loan in foreign currency, including a mortgage on real estate.
"Devaluation" can be translated as "depreciation".
In scientific terms, this phenomenon is defined as a depreciation of the national currency against foreign currencies or against gold. At this time, it means, respectively, the depreciation of the ruble against the euro, the dollar and other currencies. This means that yesterday for a certain amount of money it was possible to buy several times more goods than today.
The Central Bank in this situation can act only indirectly, the exchange rate changes under the influence of market mechanisms.
Devaluation in the economy is similar to inflation, because in both cases there is a decline in the purchasing power of money resources, and the result is a decrease in the amount of goods that can be bought for the same amount of money. The difference is that during devaluation, solvency decreases in comparison with the currencies of other countries, and during inflation, relative to itself in the national market.
Types of devaluation
- open- with it, the Central Bank notifies about the current situation, there is an exchange of funds for new ones, at a low rate.
- Closed- with it, the value of the currency decreases, but the money is not withdrawn from circulation
Reasons for the devaluation
- Inflation
- Balance of payments deficit
In 2005, there was an attempt to overcome the consequences of inflation: in Turkey, the lira was exchanged in relation to the new currency 1,000,000: 1, so for each lira a person handed over one million old money.
The government can cause a depreciation. Decisions contributing to the development of such a situation include an official depreciation, refusal to support the exchange rate, increasing the competitiveness of domestic goods, and stimulating national production.
Consequences of devaluation in the market
positive
- Increasing demand for domestic goods
- Stimulation of national production and export of products
- Reducing the consumption of gold and foreign exchange reserves
- improvement of the balance of payments
- increasing the competitiveness of the national product
Negative
Historical examples of devaluation processes in Russia
The open devaluation of 1839-1943 is expressed as follows: banknotes that lost their value were exchanged at the rate of 3 rubles. 50 kopecks for 1 silver ruble for credit notes that could be exchanged for gold or silver. With the hidden devaluation of 1897, it was possible to exchange credit notes for gold coins, and the content of gold in the ruble decreased.
Ruble devaluation in the present 2015
The standard currencies are still the euro and the US dollar. Analysts' forecasts for next year are ambiguous: some believe that the stabilization of the currency is coming, others predict a fall in the ruble. It is also possible that in next year a denomination is expected, at which the gold content in the ruble will increase and, accordingly, the dollar and euro will fall.
The reasons:
- The Crimean situation led to a depreciation
- The imposition of sanctions leads to an outflow of investments
- Decline in economic growth Russian Federation
- Sudden drop in oil product prices
- Financial speculation in the foreign exchange market by the leading banks, which, with the help of the depreciation of the ruble, contributed to the fact that the population began to buy foreign currency at a rate several times higher
- The activities of the Central Bank of the Russian Federation, which ceased to control the ruble exchange rate
- Downgrading of the rating of the Russian Federation according to Moody's - an international rating agency
Ruble devaluation and real estate
This market is sensitive to currency depreciation. In the field of luxury real estate, there are practically no changes, because it is strictly pegged to foreign currency. However, in the budget real estate market, taking into account the fact that people receive wages in rubles, and housing prices are still high, without mortgage loan hard to get by.
What to do in case of devaluation?
Business
With devaluation, there are several prospects for business development.
Devaluation is one of the biggest business problems during a crisis.
The current crisis in Russia should be regarded at the same time as a test of strength and the possibility of obtaining a new client base, the development of the enterprise.
Ways to stay afloat during devaluation:
Conclusion
During a crisis, all the actions of a businessman must be thought out to the smallest detail, it must be remembered that decisions made under stress are rarely successful. You need to understand that losses during the instability of the currency are somehow inevitable, and make decisions with this thought.
If the business is related to the import of goods, it is necessary to reduce the deadlines for fulfilling contractual obligations to several days, in this situation the best way you can fix the price in rubles. You should not try to tie it to the dollar or the euro, otherwise there is a risk of starting to sell the currency instead of the goods. The client does not need to see rate fluctuations.
When working in the B2B industry, one should not try to attract customers with “anti-crisis” discounts, otherwise long-term contracts with the company are hardly possible.
On the eve of the depreciation of the Russian currency so expected by many experts, the owners of large deposits will have to think hard about the prospects for the preservation of capital. The more often they talk about the inevitable devaluation, the more disturbing the thoughts of depositors. To understand what the prospects of savers are, it is necessary to understand the peculiarities of the term, and how the devaluation will affect existing credit obligations in various currencies.
What does devaluation mean?
Devaluation is understood as a decrease in the value of a monetary unit in nominal and actual terms. The ruble is considered in relation to the banknotes of other countries. Currently, the Russian currency is steadily depreciating against the dollar and the euro.
The actual value of the devaluation is as follows: what used to be bought for 60 rubles, after a while, will require 120 rubles to pay. The scale of depreciation is directly related to the policy of companies involved in the supply of foreign goods to the domestic market, and to the exchange rate of the ruble.
You should not assume that if the Russians, who do not feel the need for foreign goods, do not face the negative consequences of the devaluation. If a citizen is going to take a loan, he will face tougher conditions for creditors:
- lending programs that are not additionally secured by collateral or surety guarantee are being reduced;
- offers of targeted lending without a down payment disappear;
- the limits available for issuance are reduced;
- fewer benefits will be offered by the lender to its borrowers.
Often borrowers, when choosing programs, prefer to take foreign currency loans, because they interest rate less. Such behavior on the eve of devaluation is especially dangerous, and entails serious financial losses in the event of a weakening of the ruble.
If borrowed funds in rubles are used, the weight of credit obligations during devaluation will become somewhat lighter. If goods are bought for borrowed funds, the benefit is realized in the cost of the goods that were purchased before the rise in price. It does not make sense to extinguish the loan ahead of schedule, since there is no financial benefit in this. The longer you give the amount calculated on the same terms, the less the weight of the monthly installments due to the depreciation of the ruble.
Lenders are well aware of the risk of such a phenomenon, therefore, they make a clause in the contract that allows them to periodically raise the rate when circumstances change. It is worth familiarizing yourself with the loan agreement before signing it in order to understand whether the bank is insured and what to expect in case of devaluation.
Unlike ruble loans, the consequences of taking a loan in foreign currency are much more serious. Those who took foreign currency mortgages in 2014 will remember for the rest of their lives how dangerous such programs are if wage comes in rubles. With the depreciation of the ruble, the credit burden increased many times, and the owners of mortgage housing were on the verge of losing their property, as they could not cope with their debt obligations.
The greater the devaluation, the more serious the losses of borrowers who risked obtaining a loan in foreign currency. Banks, faced with massive non-payments under such programs, were forced to limit their portfolios, withdrawing large foreign currency loans from them. Only a few Russian lenders have retained their loan programs in dollars or euros.
If the ruble depreciates and the currency exchange rate rises, the favorable rate of the bank will not save the loan, and the only way out will be early repayment or refinancing with the transfer of the debt into the ruble equivalent. Compared to possible financial risks from devaluation, interest overpayments on ruble credit cards are less serious.
So far, even well-known experts have not been able to predict the growth of the exchange rate. Many people have been waiting for the collapse of the ruble for more than 100 rubles for 1 dollar and more for several years. However, despite the statements of financial experts, while the situation remains relatively calm.
If you are going to take a loan during the devaluation period, you should take into account that the changed circumstances will directly affect the bank's client, but the risks for ruble obligations are less.
It is not recommended to issue loans in a currency that is going to rise in price in the near future. Much depends on the terms for which the client takes a loan. If the amount is required for a short period, and there is a source of foreign exchange earnings, it may be more profitable to take the amount in dollars or euros.
While the country is in anticipation of change, experts are recommending that a loan be taken before the collapse occurs, and part of the debt is already paid. In this case, the bank will not have time to revise the rates, and the client will be able to get rid of debt obligations with the least problems.
Maxim Pogorelov
Worked for 7 years in a bank. I have two higher education FINEC(St. Petersburg State University economics and finance) and SPbPU(St. Petersburg politechnical University Peter the Great).
The collapse of the ruble and rising inflation at the end of 2014 led to the fact that crowds of people rushed to stores to spend the accumulated funds on household appliances. Thus, the Russians sought to maintain the purchasing power of their depreciating savings. The collapse of the ruble stimulated demand for such expensive goods as cars and apartments. Some car dealerships were even forced to suspend sales.
Is the behavior justified? It is difficult to answer unambiguously. If we talk about the purchases of equipment that the sellers bought back in the old course, and simply successfully took advantage of the moment to raise prices, then such purchases are hardly justified. As for the purchase of a new car, which was planned earlier, it was really more profitable to make a purchase before the price increase, which will happen anyway.
The conclusion suggests itself: in the conditions of devaluation, you should not make emotional purchases, but you need to limit yourself to only what you really need. Indeed, during the economic crisis and the difficulties associated with it in obtaining loans, being left without savings is a very risky option.
Experts believe that it is optimal to have an amount of up to six months of income for a rainy day. This, for example, will make it easy to survive the loss of a job.
Avoid loans if possible
In a difficult economic situation, the additional burden on loans can become unbearable. Therefore, you should try to adhere to a savings strategy and apply for credit funds only as a last resort. Large expenses that involve the use of borrowed funds should, if possible, be postponed until better times.
The need to reduce the debt burden during the crisis period is not the only reason why it is not worth taking loans today. The fact is that the conditions for their provision are now extremely unfavorable. So, at Sberbank, the rate on consumer loans exceeds 30% per annum, and on mortgages - above 15%. And even such loans are rarely approved.
What definitely should not be done is to issue loans in foreign currency. And do not pay attention to the lower rate on it. It is enough to look at the difficult situation in which foreign currency mortgage borrowers have recently found themselves, whose monthly payments in terms of increased by more than 60% (by the amount of the fall of the ruble against the dollar or the euro). The only exception that allows you to apply for loans in foreign currency is if your income is in euros or dollars. By the way, such loans are proposed to be completely banned. This bill is expected to be discussed in the State Duma.
Don't keep all your money in one currency
Running in a panic to the exchanger and changing all your savings into dollars or euros is an absolutely failed strategy. As well as continue to keep all the money in rubles, as advised by the government.
It is worth trying not to keep all the money in one currency. How to distribute funds is up to you. To do this, it is better to focus on the most liquid currency - dollars and euros. in the best way is to maintain the largest share in rubles (for example, 40%), and the rest - between dollars and euros (for example, 40% / 20%). It is better to prioritize in favor of the dollar, as it has great growth potential.
Don't panic
Finally, try not to succumb to mass panic and keep your mind sharp. Always analyze and double-check incoming information. Psychologists advise to watch less TV and not to engage in polemics with friends and social networks. And because you check the course several times a day, nothing will change.
Remember, a crisis is always replaced by an economic boom.
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