Is it worth buying a currency now and which one? Expert advice

Why is it profitable to buy dollars?

If you keep money at home in cash or in a simple ruble account, then over time it will depreciate. This happens due to the inflation that exists in our country. If you compare 2009 and 2019, you will notice how much less Russian rubles have become worth in relation to dollars and euros. If in 2009 the dollar cost approximately 30 rubles, and the euro approximately 41 rubles, now these rates are 64 and 71 rubles, respectively. If your income in rubles has approximately doubled over these 10 years, then we can say that in dollars it has not changed at all. But by buying American currency then, you could get a return of more than 100%. That is why it is important to understand when it is better to buy foreign money, what is more reliable, the euro or the dollar, and what currency is profitable to buy right now.

Additional savings

But for everything you want to accumulate OVER your airbag, different rules apply. For example, it must be...

OTHER CURRENCY

Remember the saying about putting all your eggs in one basket? It's the same here. It is best to keep your savings in different currencies, and if your safety net is in rubles, then for the rest you should choose something else. The most logical thing would be to leave the money in the currency in which you earn (if it does not coincide with the airbag currency). This way you will at least avoid conversion fees. If an exchange cannot be avoided, then it must be...

LIQUID CURRENCY

That is, a currency that you can easily and quickly withdraw or exchange. For example, dollars and euros can be exchanged even in remote corners of the country (the main thing is to find a bank branch), but you will have to suffer with the Mexican peso. But for long-term savings, it is not liquidity that comes to the fore, but a completely different quality...

STABLE CURRENCY

And stability is measured by the level of inflation in the country. And here it is not euros and dollars that become the most desirable, but Swiss francs. Here, for example, is what inflation experts predict in 2020 (top ten):

Switzerland - 0.69%
Italy - 0.97%
Greece - 1.26%
Portugal, France - 1.34%
Holland - 1.41%
Israel - 1.46%
Eurozone as a whole - 1.48%
Korea - 1.52%
Belgium and Japan - 1.54%
Spain - 1.55%

For comparison, the expected inflation rate in Russia in 2020 is 4%. But do not forget that the lower the inflation rate in the country, the less interest local banks will offer you on deposits.

THE CURRENCY OF YOUR FUTURE

And, of course, in the long term, it’s worth taking into account your personal plans for life. Are you planning to move to another country? Or send your child to study abroad? Or maybe you want to buy foreign real estate? Then it makes sense to save in the currency of the country with which you connect your future.

Vladimir Vereshchak, certified financial advisor, founder of the consulting company:

If you have a small amount of money on hand, you should definitely choose rubles. You will lose more on conversions and service fees than you will gain from the benefits of currency diversification. In this case, a “small amount” is, conditionally, 1-2 annual income. Russian banks are quite suitable for preserving these savings; this will be your “safety cushion”. Anything larger can be diversified between classic “Eurodollars” in equal proportions. There is no need to invent any exotic things in the hope of getting more income, especially when there is still little money. This does not work. Traditional, proven methods of forming personal capital are much more reliable and effective in the long term than any speculation.

How do American dollars differ from other currencies?

The American dollar is the currency of international circulation. Whatever political events occur and whatever relations develop between countries, the situation is such that today the largest states, including Russia and China, store most of their gold and foreign exchange reserves in dollars, and simply cannot refuse them .

Euro is the money in circulation in the European Union countries. Despite the fact that the euro has been strengthening against the ruble for decades, when compared with the dollar, recently this currency has begun to lose ground. The reason for this is the uncertain economic and political situation in the European Union. In particular, the desire of some countries to leave the union had a negative impact on the euro; its exchange rate against the dollar fell sharply.

Since in Russia both American and European money are equally accessible, a reasonable question often arises: what is better, dollars or euros? There is no clear answer, but if we rely only on 10-year statistics, the dollar has grown stronger against the ruble.

The Swiss franc is the most reliable currency in the world. It is no coincidence that they say “keep your money in Swiss banks.” It is ideal for preserving, but not for increasing capital. In principle, the exchange rate of the franc is very dependent on the dollar and euro, but the franc is less accessible and more difficult to buy and sell in Russia.

Chinese Yuan is not suitable for investment, since the exchange rate of this currency is controlled by the Chinese government. It is impossible to predict what might happen to your money if you invest it in yuan.

The ruble exchange rate is now influenced by a huge number of factors: from the situation in Belarus to the threat of further anti-Russian sanctions. Is it too late to buy dollars and euros and what foreign currency is better to choose for savings, AiF.ru asked financial experts.

Yuri Tverdokhleb, Associate Professor of the Department of “Regulation of Financial Institutions”, Faculty of Finance and Banking (FFB) RANEPA:

“The general situation is such that there is no risk of devaluation for the ruble. But there are no prerequisites for a sharp strengthening of the Russian currency. The ruble will fluctuate within the current limits. Depending on the factors, it will either weaken slightly or strengthen slightly.

I don't think today is a favorable environment for investing in the euro and dollar. We see that the dollar exchange rate is affected by serious negative processes that are taking place in the United States: these are riots and the upcoming presidential elections.

Regarding the euro, we see negative interest rates in Europe. This is not the most interesting area for investment.”

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Vitaly Mankevich, President of the Russian-Asian Union of Industrialists and Entrepreneurs:

“It’s not worth buying currency now, the current exchange rate is 7% higher than the equilibrium rate due to the factor of Belarus and Alexei Navalny . Fair values of the ruble are in the range of 70-72 per dollar; at this rate, with the cost of oil at $45-46 per barrel, you can buy American currency.

The choice of currency for investment depends on your goal. In the short term, up to six months, the dollar will weaken against the euro and lose to it, but in the long term, the American currency is much better suited for investment due to a more extensive range of investment instruments - stocks, bonds, etc.”

Sergey Statsenko, investment advisor:

“The need to purchase foreign currency can be considered as a diversification of personal savings for the long term. If you want to buy currency and sell it after a few months, you can make a profit, but you also risk losing part of your investment if you urgently need funds in rubles and have to convert the currency into rubles.

It is necessary to distribute investments among several currencies, such as the euro and the dollar, in addition to savings in rubles. The ratio of shares of currencies will depend mainly on the personal purposes for using savings, the amount of savings, income/expenses, and existing financial obligations.”

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Grigory Vershinin, financial market expert:

“Remember: the rule always applies: the dollar and euro should be bought when they are slightly adjusted in price. Today, the absolute winners are those people who transferred their savings into euros back when the euro was worth around 70 rubles. For every thousand euros they won at least 15 thousand rubles. At the same time, there is no doubt that it is now profitable to store money in foreign currency.

The growth in the value of the euro and dollar exceeds the yield on deposits, which decreased significantly after the Bank of Russia lowered the key rate.

Now I would advise people who want to purchase currency not to rush, but to wait for its exchange rate to stabilize. It is possible that the cost of the euro and dollar will decrease slightly, and then they can be bought with greater profit than today.

The optimal option for storing savings remains a diversified portfolio, including both dollars and euros, as well as rubles, federal loan bonds and shares of the most promising companies.”

What are the advantages of buying currencies

There are many other ways on the market to preserve and increase your savings, all of them differ in varying degrees of reliability and profitability. Let's look at some of them.

Deposits. You can open a savings deposit in any bank and receive income in the form of interest. This method of investing is relatively safe. Today all ruble deposits are insured. The disadvantages are the following: the maximum amount that can be insured for one deposit in one bank is 700,000 rubles; the rate is low, it helps protect money from inflation, but does not increase it; To receive the maximum interest on the deposit, the amount must be significant, from 1,000,000 rubles.
Bonds. These are securities issued by the government. The degree of reliability is high, but the percentage is small. It is unlikely that you can make much money from them.
Shares and units in investment funds. They are a high-risk investment method. The percentage income can be much higher than on the deposit, but it can also be negative. The downside is that your money is managed by third parties, an investment fund, and nothing depends on you.
Currencies. Their rate changes constantly and you can make money both on growth and on decline. The basic principle is this: buy when the rate has fallen and sell when it has risen. Dollars and euros are attractive due to their availability; they are easy to exchange at any bank. But you need to look not at what is larger, the euro or the dollar, but at how much the value of the currency changes. The American dollar is today a recognized world currency, and its exchange rate is more flexible than that of the euro. This is why it is profitable to sell and buy dollars today.

What does the dollar exchange rate depend on?

Rates change daily. They are influenced by many factors. Financial and political news, reports of large international companies, statements of top officials of states. All this makes the dollar rise in price or fall in price literally every minute.

In Russia, the price of the dollar against the ruble is very dependent on the cost of oil. The more expensive black gold is, the more the ruble strengthens, and the American currency becomes cheaper accordingly. But lately we have not seen a significant increase in the price of oil. On the contrary, compared to previous years, it decreased; accordingly, the dollar strengthened against the ruble.

When is it profitable to buy dollars?

Let's make a reservation that it is better to invest in foreign currencies with knowledge of the matter. You need to understand economic news and understand how it can affect the value of money. If there is no such knowledge, then experts recommend choosing a long-term strategy. That is, buy dollars or euros and keep them for a year or two, or even more. This is due to the fact that exchange rate fluctuations in a short period of time can be quite strong, but if we consider the history of exchange rates over a long period of time, the dollar and euro have only grown against the ruble, the Russian currency has not been worth more for decades, and the general direction of exchange rates currencies never reversed. This is a steady upward trend. Therefore, it is profitable to invest in dollars for a long time.

You can keep foreign money in a bank by opening a savings account. The interest rate on it will be much lower than on the ruble one, but you will be able to get double income, from the deposit and from the exchange rate difference.

What is the demand for currency now?

The most popular currency in the Russian Federation is the US dollar, which accounts for 2/3 of demand. Less popular, with a share of 1/3 of demand, is the euro. Other currencies in Russia account for less than 1% of the total volume. The lion's share of demand for currency from individuals comes from transactions in exchange offices. The largest volume is accounted for by transactions involving the transfer of money to foreign currency accounts, and only 1/3 is occupied by the sale of foreign currency in favor of the ruble.

At different times, the statistics of operations will be different. This depends, in particular, on the profitability of investments in foreign currency. Thus, in 2020, the purchase of cash dollars showed perhaps the best ruble yield among all major instruments - 20% per annum. And a year earlier, in 2020, the dollar gave the investor a 5.5% annual loss. The euro turned out to be more profitable - plus 7.1% at the end of the year. The graph shows fluctuations in demand for currency over the last 3 years.

December 2014 was remembered for a record increase in demand for foreign currency, when, after the US dollar exchange rate jumped to 80 rubles, the volume of household demand amounted to $8.2 billion. For comparison, the rather high figure for March 2020 was $4.5 billion.

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What is better to buy, dollars or euros

All financial analysts unanimously advise dividing your savings. Do not keep money in one bank and in one currency. An approximate distribution of shares could be as follows:

rubles - 30-40%;

dollars - 40%;

euro - 20-30%.

This is the optimal formula for saving money. All currencies can be deposited, preferably in different but reliable banks. It is worth remembering that the state only insures rubles. Over time, it is worth purchasing and depositing into your account the currency that seems most promising.

Here are some rules for investing in foreign currencies:

It is worth considering a long-term strategy, that is, purchasing foreign currencies for a long time, with the goal of receiving income in a few years.
You can start investing in dollars gradually, buying 100-200 at a time and constantly increasing your stock. But it is worth understanding that tangible benefits from the growth of the exchange rate can only be obtained with significant capital, at least several tens of thousands of dollars or euros.
If you purchased American dollars, you do not need to check the rate every day and run to exchange offices. This way you can only make a loss, because any bank charges a commission for conversion. Moreover, there are seasonal fluctuations, this is quite normal. It has been observed that euros and dollars often become a little cheaper in the summer, when Russians go on vacation, and become more expensive before the New Year.
However, you need to be interested in economic news, read financial forecasts and analytics to stay abreast of general trends.

On weekdays or on weekends?

It is better to exchange rubles for dollars or euros on weekdays: on weekends the exchange rate may be higher. The fact is that there is no trading on the Moscow Currency Exchange on weekends, while on Saturday or Sunday events may occur that could negatively affect the ruble exchange rate. Financial institutions factor this risk into weekend foreign exchange rates.

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