Do I need to get rid of dollars and euros?

The Central Bank presented for discussion with experts and market participants the report “Financial Market: New Challenges in Modern Conditions”. Among other things, it refers to the inevitability of the rejection of the currencies of unfriendly states in the internal and external payment turnover. Nikolai Vavilov, a specialist in the strategic research department at Total Research, told Moskovskaya Pravda what this means and what the devaluation threatens to holders of dollars and euros in Russia.

First, if the natural process of a phenomenon is accelerated, then this process ceases to be 100% natural. Actually, this happens with the forced refusal of banks from the currencies of Western countries. It could be softer both for financial institutions and for people, because as a result, the creation of reserves for savings and savings in foreign currencies becomes a problem – there is nothing at all in exchangers now.

A massive forced exit from US and European securities is also a negative factor, since no one has managed to create alternatives for investments – there are too few Chinese shares on the Russian market, the Russian market is now too weak and uninteresting.

That is, a kind of repressive measures for a sharp and quick exit from Western currencies is an unambiguously negative story, besides, the division of status into “friendly” and “unfriendly” does not seem quite correct. Whatever the attitude of people or countries towards the US, the dollar is still the most reliable and popular currency in the world, even despite the increase in transactions without using it.

As for the ruble exchange rate, the Central Bank has had a purely indirect influence here for half a year until a budget rule is adopted in one form or another. And according to the new version, most likely, the regulator will simply buy yuan instead of dollars. So, the exchange rate in the region of 80 to the dollar can be seen, most likely, already this year, especially if oil prices remain below $100 per barrel – the July budget has already lost almost 75 billion of projected oil and gas revenues, and this is direct evidence of the upcoming devaluation.

Reference

You can read the report of the Central Bank of the Russian Federation at site Bank of Russia. The collection of comments and suggestions will last until September 1, 2022.

Photo by Moskovskaya Pravda