Dirham, yuan, manat: what currencies should Russians invest in in 2023

A year ago, this question – in what currency to invest in order to preserve and increase their funds – was not before the vast majority of our compatriots. If you were lucky enough to have “extra” money, then they invested, of course, in dollars and euros – the world’s leading reserve currencies, whose quotes against the ruble were constantly growing. The outgoing 2022 with its sanctions, bans on the import of European and American currencies into the Russian Federation, retaliatory restrictive measures of our Central Bank, the closure of a number of borders for Russians, has greatly changed the situation. The dollar and the euro have turned into “toxic” currencies before our very eyes. Does it make sense to trust them in 2023? Or are there other currencies in which you can invest your savings without fear? We addressed these questions to the experts.

Yulia Kuznetsova, member of the expert council for the protection of the rights of retail investors, investment adviser in the register of the Central Bank of the Russian Federation:

“It is generally believed that the safe currency is the one that is the least volatile and not subject to economic risks. If you look at the classic concept of “safe currency”, then it is also the currency of the country where inflation is at a consistently low level. These criteria are best met by the Dubai Dirham, the currency of the United Arab Emirates. In my opinion, this is the most reliable currency, since its exchange rate has been constant for several years – 3.36 dirhams per dollar.

But it is best to earn, of course, on a volatile currency. A currency whose exchange rate changes by 5-10% per week is very volatile, and it suits professional stock players. Of course, you can make money on the yuan, and on the dollar, and on the euro, since they are the most unstable currencies in relation to the ruble.

In general, it is necessary to evaluate the currency according to the economy of the country in which it circulates: the lower the inflation, the more stable the GDP, the more stable the currency of this country will be. But, as many experts say (and I will not argue with this thesis): you need to keep money in the currency of the country in which you live.

Andrey Vernikov, financial expert:

“The trend for the depreciation of the ruble for 2023 has been set. The weakening of the ruble will continue next year due to the deterioration of the balance of payments associated with the fall in export earnings. In order to save investments in these conditions, one should buy foreign currency. In my opinion, the best choice is the Chinese yuan. I cannot recommend friendly currencies of small countries because of their low liquidity.

As for the dollar and the euro, it is better not to keep them in banks: there is a high risk of freezing. It is better to buy Russian Eurobonds in dollars, for example, RUS-28. (Eurobond “Russia-28” or RUS-28 is one of two Eurobonds of the Ministry of Finance with an affordable lot size for a “mere mortal”. The currency of this paper and coupon is the US dollar, the maturity date is June 2028, the cost is $1000 – “MK” .). Thus, the risk of freezing investments is removed.

Another way to “as it were” to buy dollars, but at the same time, in any case, to avoid its freezing, is the purchase of commodity assets. For example, bars of silver or gold. These metals are traded on international exchanges and their price is determined in dollars.”

Yuriy Kravchenko, Head of Banks and Money Market Analysis Department, Veles Capital investment company:

“Despite the unprecedented volatility and uniqueness of the current situation in the Russian foreign exchange market in 2022, a simple rule in the form of diversifying funds in different currencies has not lost its relevance. The basket of major currencies in the form of rubles, dollars and euros in 2023 can also be replenished with the Chinese yuan, the share of transactions with which in the structure of foreign exchange trading is no longer inferior to the American and European currencies. For example, 3/4 of the basket can be divided equally between the ruble (one half) and the dollar plus the euro (collectively the second half), and the remaining 1/4 can be placed in Chinese currency. At the same time, investment instruments in the Chinese currency are gradually expanding, for example, bonds in yuan of large Russian companies and banks appear. The dollar and the euro will also not lose their attractiveness, despite all the talk about their “toxicity” and the devaluation of the Russian economy. The continued interest in them was clearly demonstrated by the situation on the foreign exchange market in December.

At the same time, when investing in foreign currencies, you should correctly calculate your future financial flows so as not to lose money due to high spreads, that is, the difference between buying and selling currencies, or commissions when exchanging currencies. It should also be remembered that there are still restrictions on foreign currency in cash and low liquidity of the Chinese currency, including in the form of a lack of cash yuan in the domestic market for individuals.”

Alexander Razuvaev, Member of the Supervisory Board of the Guild of Financial Analysts and Risk Managers:

“I believe that the best currency for investment is the ruble. You need to understand that by April 2023, our annual inflation will decrease, because the ultra-high inflation of March of this year, which was caused by devaluation, will leave the calculation. In my opinion, inflation will drop to 6%. Accordingly, the Bank of Russia will begin to lower the key rate, so that a ruble deposit can be opened now. Well, plus the ruble is our stock exchange, shares. With the restoration of oil exports, the balance of supply and demand in the foreign exchange market will change, respectively, the ruble will begin to strengthen against the dollar, and against the euro, and against the yuan. Then the main ruble pair will return to about 60 rubles per dollar.

The dollar and the euro are “toxic” currencies. Sanctions may also affect ordinary Russians. Western states have already adopted the ninth package of sanctions, and the tenth may follow, and it is not known what else they will come up with, but a blow to foreign exchange transactions may well be dealt.

If you are already interested in something exotic, then I can advise you to pay attention to the UAE currency, the dirham, and the Azerbaijani manat. The dirham is rigidly pegged to the dollar, as for the manat, it is an oil currency, but with raw materials, I think everything will be all right. Let me remind you that the Moscow Exchange plans to launch trading in the currencies of Azerbaijan, the United Arab Emirates and Egypt in 2023, since these countries are major trading partners of Russia.