Russians are again interested in toxic currencies: dollar deposits began to grow

The main trends in the foreign exchange deposit market are named

In November, foreign currency deposits of individuals increased by 1%. This is evidenced by data from the Bank of Russia. The growth, at first glance, is small, but what is noteworthy is that bank deposits in foreign currency increased for the first time since May 2022, and over the past 17 months there has been a gradual decline in their share. Why Russians decided to open deposits in foreign currency again and whether it is possible to talk about a change in their attitude towards the “toxic” dollar and euro, MK found out from experts.

In Russian banks, foreign currency deposits of citizens in November increased to $27.1 billion. And although nominally compared to October they increased by only 1%, this happened against the backdrop of a constant reduction in foreign currency deposits of the population. It is curious that the total volume of foreign currency funds of Russians in banks, despite all the restrictions, increased by 0.3% in November, to $41.7 billion, also showing growth for the first time since May last year.

One of the obvious explanations for the desire of compatriots to again have foreign currency deposits is associated with an attempt to insure their money against possible risks. Everyone remembers the epic exchange rate of the dollar: in a year it lost almost 40% of its value. This currency experienced particularly bright adventures in the fall: after the dollar broke through the “psychologically” significant level of 100 rubles, the authorities began to take measures to stabilize the exchange rate below this level. As a result, throughout November the dollar decreased its value against the ruble, but in the last month of the year it began to strengthen again. On the morning of December 25, the dollar was at 92 rubles, and the euro on the Moscow Exchange even rose to 102 rubles for the first time since October 20.

All this leapfrog with the exchange rates of unfriendly currencies could have led Russians to think that next year the dollar would rise again and they decided to start slowly stocking up on American money and the euro in November, while the exchange rates of both currencies were within acceptable limits. However, experts believe that the statistics of the Central Bank of the Russian Federation indicate not only a return of interest in savings instruments that were traditional in the recent past – dollars and euros. “The rates on deposits in rubles are much better compared to foreign currency, but they are also interesting for foreign currency, and the risks of a new weakening of the ruble, which has not consolidated below 90 rubles per dollar, force many to at least partially use the current exchange rate to fix their position and move into foreign currency deposits,” says Dmitry Alexandrov, head of the analytical research department at IVA Partners. “Moreover, there are many options among currencies, both friendly and unfriendly.” The share of foreign currency deposits has been greatly reduced, now there may be some increase, but it will not be strong if the population’s expectations of a sharp weakening of the ruble do not increase, the analyst noted.

It is important to understand that the Bank of Russia estimates the volume of foreign currency deposits at the equivalent of $27.1 billion, which does not mean the use of only US currency in deposits. “Citizens are accustomed to diversifying their savings, namely, to transferring part of their assets into foreign currency,” believes Associate Professor of the Department of State and Municipal Finance of the Russian Economic University. Plekhanov Mary Valishvili. “At the same time, there is an obvious downward trend in the use of “toxic” currencies. More than 30 credit institutions offer foreign currency deposits in the currencies of friendly countries, such as the yuan, rupee or dirham. It is these currencies that make up a large share of the increase in savings. The rest are those foreign currency deposits and accounts that have remained virtually “frozen” since 2022, since withdrawals are only possible in ruble equivalent.” From the point of view of increasing assets in dollars and euros, individuals prefer to keep them in cash, since this is possible to maintain their liquidity, the expert is sure.

But there is an opinion that the growth in foreign currency deposits of the population is not a consequence of the influx of currency, but of the revaluation of these deposits. Thus, the head of the analytical department of the BKF bank, Maxim Osadchiy, noted that in November the euro strengthened against the dollar by 2.9%, and the yuan by 2.6%. Accordingly, the main trends in the market of foreign currency deposits remain – de-dollarization, de-euroization and yuanization, the analyst is sure.