Currency is not a remedy for panic
The events of June 24, 2023, for a short time raised the price of buying a cash dollar in Russian exchange offices to 99–200 rubles. per dollar. A day later, when it became clear that the rebellion attempt had been stopped without serious consequences, the exchange rate of the cash dollar dropped significantly, but there were probably those who bought dollars, including 200 rubles each.
< span itemprop="height" itemscope itemtype="https://schema.org/QuantitativeValue">
Indeed, without the rush demand, there would not have been such a price in exchangers. Both modern Russian and world practice convincingly prove that political crises and conflicts sooner or later come to a resolution, but no one compensates for the losses to citizens from incorrectly made decisions in the currency or stock market. In this article we will try to explain why even in those cases that seem extreme to us, we should not panic and make emotional decisions.
Before running to an exchanger to buy currency at any rate in any unusual situation (or, alternatively, running to the bank to withdraw a deposit, losing interest), you need to ask yourself the question: how much profit can you make on this particular operation, or at least be able to do you keep your savings and not incur a loss? As soon as you start thinking about it, the desire to do rash things immediately drops.
There are many examples showing that the rationalism of the population in difficult situations can protect not only the citizens themselves from losses, but also the national currency. For example, in January of this year, in Brasilia, the capital of Russia's BRICS partner Brazil, there were riots related to the fact that part of the supporters of former President Jair Bolsonaro, who lost in the presidential election in 2022, tried to storm the presidential palace and remove the current President Luiz Inacio Lula yes Silva. An attempt to “revise” the results of the elections through riots and pogroms in the capital ended in the defeat of a few rebels. However, it is important for us to pay attention to the dynamics of the Brazilian real, which, like the Russian ruble, is floating and is not regulated by the central bank.
If in the first days after the New Year, the real exchange rate fell against the US dollar by 3.6% against the backdrop of protest rallies that began in the capital of Brazil, then it remained almost unchanged, and after the suppression of the rebellion on January 9, it immediately grew by 5% against the dollar. There was no excitement in Brazilian exchangers. The banking system also remained stable, there were no queues, Brazilian banks did not face a massive outflow of deposits. And this despite the fact that Brazil, like Russia, is a developing, predominantly resource-based country, where there are enough not only economic, but also social problems. This situation speaks of trust in the current government, on the one hand, and on the other hand, that Brazilians can not only have fun at carnivals, but also, when necessary, make very rational decisions.
And all because Russia's BRICS partners have had a market economy longer than in Russia, and the population had enough opportunities to improve financial literacy and not make rash decisions.
There is another reason not to run to buy currency at any price. After all, foreign currency is issued by the central bank of another country, and by purchasing it, you, along with it, acquire to some extent the economic problems of this country, as well as political risks that would not exist if you continued to keep savings in rubles. That is, you can lose money, as any risks will work in the country whose currency you purchased. An interesting example here is another country friendly to Russia – Turkey.
In July 2016, as you know, there was an attempted military rebellion in Turkey and the overthrow of the incumbent President Recep Tayyip Erdogan. The rebellion was quickly suppressed, and, as the President of Turkey himself later reported, not without informational assistance from Russia. However, the economic behavior of the Turkish population during and after the attempted rebellion looked paradoxical from the point of view of many Russians, even though the Turkish lira is, to put it mildly, far from being the most stable currency in the world. The Central Bank of Turkey, after the suppression of the rebellion, reported that on the day of the rebellion and immediately after it, the Turkish population ran en masse to exchangers in order to … exchange dollars for lira, and in just two days, Turkish citizens exchanged $ 10 billion for lira, and most citizens then put lira into deposits in banks. This behavior was due to the fact that many citizens were sure that the origins of the rebellion are in the United States, which means that the dollar could become “toxic” for Turkey. Over time, the dollar did not become “toxic” for Turkey and the lira weakened significantly, but the rationalism of the Turkish population during the period of the rebellion deserves only respect.
But even if you are not going to change rubles for foreign currency, creating unnecessary excitement in banks by taking deposits is also not at all necessary. All licensed banks in Russia, as a rule, insure the deposits of individuals with the Deposit Insurance Agency. If the bank is not threatened with revocation of the license, then there is simply no point in taking money from the bank. You can lose a lot on termination of the contract, as you risk earning very little on your deposits due to their early withdrawal with loss of interest, and in some cases, earn nothing at all if interest is charged once a year.
Of course, in case of emergencies (such as natural disasters, for example), you should also have a small amount of cash at home. But still, even in these cases, cash must be kept only in rubles. If, for example, due to an emergency, you have to suddenly leave home and move into some temporary housing, think about what you will do with foreign currency on hand? Looking for an exchanger where the dollars accumulated under your pillow can be quickly sold at any, even the lowest, price?
Keeping foreign currency in Russia under your pillow is unprofitable and risky. If you keep US dollars or euros at home, political and sanctions risks, which no one has yet canceled, may work. And keeping the currencies of friendly countries at home is also fraught with risks. If we take, for example, the Chinese yuan, then we must remember that the Chinese yuan has its own risks, and at present its exchange rate against the dollar is also falling, and it is not yet clear what stabilization measures the People's Bank of China will take in the future.
So far, he is doing nothing, and this is alarming – perhaps China still needs a weak yuan to support its exporters. And if you keep “soft” currencies of friendly countries at home (for example, the UAE dirham or the Turkish lira), it will be almost impossible to exchange such currencies for rubles in any extreme case. Foreign currency can only be safely stored abroad in a reliable bank in one of the friendly countries (but even there this security is not one hundred percent). In Russia, it is better to keep your savings in rubles – most of it in a reliable bank that can provide you with a profitable interest, and a smaller part – at home under your pillow, “just in case.”
Of course, a weak ruble is not beneficial for ordinary Russians, whose savings in dollars are depreciating. This is a risk for ordinary citizens. In the ongoing weakening of the ruble, most likely as a consequence of the recent panic in the foreign exchange market, the Central Bank of the Russian Federation does not yet see a threat to financial stability. That is, the ruble allows the state itself to weaken. And today it is necessary to have more oil and gas revenues in the budget. The expensive ruble is unprofitable for exporters and the state budget, and it is no accident that First Deputy Prime Minister of the Russian government Andrei Belousov raised his forecast for the optimal dollar corridor for the Russian economy from last year's 70-80 rubles. up to 80–90 rubles. per dollar.
Thus, if the ruble weakens with the permission of the authorities, this means that the state sees no reason for the Russian currency to break into an uncontrollable peak. So, in emergency situations, instead of panic, you need to develop a strategy – how not to lose money. The strategy of different investors and bank depositors may be different, depending on the so-called risk appetite. Someone (for example, qualified investors) will try to capitalize on sharp fluctuations in stocks and currencies in conditions of instability.
And someone, on the contrary, will not make sudden movements, but will prefer to keep rubles in Russian banks and It is possible to diversify these savings with a foreign currency deposit in a foreign bank or an investment in gold and precious metals. But in any case, with unexpected news on TV or on the Internet, running to the exchanger to buy currency for a high price is a bad idea.