False start: Citizens rushed to sell dollars and euros
Dwain Ross
19 / February / 20
Visitors: 246
Analysts, by contrast, advise keeping cash savings
"Wooden" waited in the wings: it is again in demand. Citizens with deposits in foreign currency withdraw dollars and euros and convert them into rubles. This follows from the statements of credit organizations posted on the Bank of Russia website.
According to reports, in February, the volume of funds on foreign currency deposits in Russian banks fell by almost $ 2 billion. The outflow fell on the majority of large Russian banks. So, the population withdrew from Sberbank, VTB and Gazprombank $ 300-360 million each. Of the smaller banks - SMP Bank, Otkritie FC, Alfa Bank - outflows from foreign currency deposits amounted to $ 120-200 million.
According to analysts, foreign currency investors in the fall of the ruble saw a chance to fix their income. Money in rubles is either placed on deposits or invested in assets on the stock market after a sharp drop in quotations.
As follows from the statements of banks, the volume of investments by individuals in ruble accounts in February 2020 increased by almost 390 billion rubles and reached 29.7 trillion. rubles. In March, experts say, the volume of conversion of foreign currency into rubles will become even greater: there has not been a rate when the dollar is worth more than 80 rubles.
The strategy of exchanging currency at a high rate, and buying up more ruble assets at a low rate, is quite clear. However, this does not make it less risky: betting on future growth may not be justified.
The rapid decline in markets continues due to a reassessment of the impact of the spread of the coronavirus epidemic on the global economy. According to a March survey of Bank of America managers, most professional investors are waiting for a recession in the global economy. At the same time, monetary incentives announced by leading regulators may not be enough to prevent a recession. As a result, all over the world there is a general closure of risk positions - everyone is running into the dollar.
In the Russian market, the situation is aggravated by the collapse in oil prices - a key export commodity of the Russian Federation. March 29, the price of Brent crude oil at the start of trading on the London Stock Exchange fell to $ 23.1 per barrel. The last time Brent was so cheap in November 2002. At the same time, the price of Russian Urals oil fell to $ 16.2 - the lowest value of 1999.
So, it is possible that foreign exchange investors hurried a bit. In the case of a negative scenario, in which the price of Brent drops to $ 20, the weakening of the ruble will definitely accelerate. In this case, analysts expect the Central Bank to raise the key rate. According to preliminary estimates, if the price of oil drops to $ 20 per barrel and lasts there for at least three months, the dollar will rise above 95 rubles / $.
The forced simple economy of the Russian Federation is adding fuel to the fire due to quarantine measures. While we are talking about a non-working week, which citizens will spend in self-isolation. But there is no guarantee that the week will not turn into two, or even a non-working month. In fact, the Kremlin has few alternatives: either significant losses in the economy, or a pandemic according to the Italian scenario, with the paralysis of everything and everything, and the situation sliding into anarchy and chaos.
Now the financial authorities, although they will never admit it, are holding onto the ruble in the region of 80 rubles / $ with all their might. But it cannot go on like this endlessly - the economy is simply not designed for people to sit at home. According to forecasts, even if the peak of the pandemic passes by June-July, and the global economy begins to recover quickly - even in this scenario, the physical reduction in global oil demand will be about 5%.
For the Russian economy, and for the ruble exchange rate, this is a very negative prospect. Our national currency is directly dependent on oil, and oil is now "bad."
So, it is possible that when the coronavirus is finished, we will see a rate of 110 rubles / $. And then the strategy of converting the currency into rubles, with the subsequent purchase of collapsed assets, will become very profitable.
“Some foreign currency depositors really took profits by selling foreign currency,” notes Andrey Bunich, president of the Union of Entrepreneurs and Tenants of Russia. - They felt that the current dollar rate is already quite high. And, as it turned out, hurried up.
In fact, now it’s impossible to say when the extreme moment of the dollar’s growth will come, and exchanging the currency for rubles will become a clearly profitable operation. It depends on the actions of our authorities to curb the economic crisis, and on how long the pause due to quarantine will be. And only after the cessation of the pandemic will it be possible to assess the depth of the "rabbit hole" into which we are now falling.
So far, I do not see anything rosy ahead. Even one non-working week means a shock to the Russian economy. If the pause is prolonged, there will be cash gaps, non-payment chains, supply disruptions and accumulation of debts.
Small and medium-sized enterprises will not be able to pay salaries. Plus, the situation will be aggravated by personal loans, which a significant number of citizens have - car loans, mortgages. Add here utility bills and rents - millions of people rent housing in Russia.
I think throughout the country - with a long downtime - a wave of non-payments will sweep. Plus, there will be a mass of debts that cannot be recovered. In fact, this situation will spread like a cancerous tumor. It’s even hard to say how many citizens it can touch - an account for tens of millions of people.
“SP”: - Will the state be able to compensate for the losses?
- I think - can not. Neither compensate nor collect money. People will eat up stocks - whoever has them. In general, the situation with arrears will create a huge burden on banks.
In such an environment, everyone will wait for the ruble to fall further. And if the catastrophic scenario begins to be realized, it’s even hard for me to say to what level the ruble will roll back.
I note that today a number of economists say that we need to - like the United States and the eurozone - give out money to everyone. I think these are provocative advice, and in the case of Russia, they are fraught with the collapse of the financial system.
In the US and Europe, the current crisis is associated with the inflating of colossal financial bubbles - in tens, if not hundreds, of trillions of dollars and euros. In fact, coronavirus only covers this situation. The projection of these mega bubbles is the overproduction crisis in China.
In such a situation, a temporary stop of the Celestial Empire is even at hand - it saves the economy from overheating, and helps to avoid the so-called hard landing.
But in Russia there are neither financial bubbles, nor a crisis of overproduction - we have a reverse situation. Therefore, we do not need to strive to maintain the previous proportions in the economy, distributing money to the right and left - otherwise we simply destroy all reserves.
At an oil price of $ 25 per barrel, and in the absence of reserves, the banking assets of the Russian Federation will simply be reset to zero. And the consequences of this will be worse than the devaluation of 1998 - at the level of the most severe crisis of 1991.
“SP”: - With such prospects, those who hold the currency win?
- Of course. Especially those who keep the currency in the cache. In extreme conditions, banks can freeze foreign currency deposits, and de facto not give them back - in our recent history this has happened.
To prevent this from happening, the Russian government should, I believe, separate the external economic contour from the internal one. In the domestic, tight control over the housing and utilities sector, wholesale trade is needed - albeit by the military and the Ministry of Emergencies. Plus, you need to introduce control over tariffs. So far, unfortunately, our government does not think in such categories.
If the order is quickly restored, the ruble can be kept in the range of 80-100 rubles / $. If time is lost, the exchange rate can soar over 100 rubles / $, and there will be no assets in which it will be possible to securely depreciate money.
