Devaluation of the ruble in simple words - This is a drop in the value of the national currency, which is due to many economic and political factors. This phenomenon mostly concerns ordinary citizens of the Russian Federation, since most of them receive their salaries in rubles. The fall in the exchange rate leads to an increase in prices for a number of goods and services, while the level of wages remains the same. As a result, purchasing power decreases: the hard-earned money can now buy fewer products in the store.
Of course, depreciation of the national currency - This is a phenomenon that is characteristic not only of the Russian Federation, but also of a number of other states. But, more often than not, one has to observe the situation as against the background of the growth of the dollar and the euro, the citizens of the Russian Federation become poorer. Therefore, it is not comforting to note that devaluation is not an exclusively Russian phenomenon.
Since the 1990s, many national currencies of developing and developed countries have devalued. Relatively recently, the Belarusian ruble experienced a serious crisis; earlier, the crisis affected the Italian lira and even the British pound. The value of the Russian ruble is gradually decreasing. Until 2012 national currency only occasionally it crossed the line of 30 rubles per US dollar, and even in some years it strengthened. Recently the course RUB sagged noticeably and reached 80 RUB for 1 USD, and it seems that this is far from the limit. The main reason is the reluctance of the state to intervene in the situation and support the national currency.
Since the problem has been especially acute lately, I decided to sort out the following issues:
- What is devaluation?
- Why is it happening?
- How does devaluation affect the lives of ordinary citizens?
- How to protect yourself from this negative phenomenon?
I have reflected all the answers to these questions in this article.
Historical information about the devaluation of the ruble
As you know, the ruble exchange rate against national currency The US has not always been as high as it is today. If you trace the dynamics of the exchange rate since 1992, you can see a sharp decline, denomination and a period of some stability. However, since 1998 RUB goes down steadily if you draw an approximating (averaging) line on the graph. But, even during the time of tsarist Russia national currency was not always very stable. In the 1830s, there was a sharp drop in its value against the background of other currencies. The reason was that the state stopped actively supporting the ruble. As a result, money fell in price by more than 90%, which affected the already difficult life of ordinary citizens. During the Soviet era, there were also large falls: as a result of the 1961 reform, the value of the ruble fell by almost 80%.
Today's fluctuations in the exchange rate will not let any citizen of the Russian Federation get bored. The currency rises and falls again, which ultimately affects the purchasing power. Unfortunately, ruble devaluation - a process that cannot be stopped. This phenomenon occurs for various reasons:
- Depreciation national currency other states;
- Foreign policy factors;
- Growth in the volume of goods and services provided by foreign companies;
- Domestic and global inflation;
- Strong relationship between RUB, USD and other currencies.
Every citizen of the Russian Federation suffers to one degree or another from the depreciation of the ruble. It almost does not apply only to those who invest their money in more reliable financial instruments: dollar, euro, Crypto-currency... Although no one is insured against the risks of losses, everything is clear in the case of the ruble - it will continue to fall. Let's take a closer look at what devaluation is and how to keep your savings from depreciating.
What is the devaluation of the ruble in simple words
This term comes from the Latin word, which means "cost reduction". Devaluation is characterized by the following negative phenomena:
- Having the same amount, expressed in monetary units, a person can afford to purchase fewer goods or services.
- Course national currencies decreases in comparison with the currencies of other states.
- The amount of gold contained in hard currency is decreasing.
Fortunately, the available funds can not only be saved, but also increased. The best way is to spread your savings across different assets. In this case, the best option is long-term investments.
Why is the ruble depreciating, who benefits from it
Let's consider the mechanism of devaluation. This phenomenon has two main reasons: inflation и deficit balance of payments. The latter represents the movement of finance from one state to another (in simple words - a payroll for settlement transactions between the country and the rest of the world). Both inflation and deficit are a consequence of the wrong financial policy of the state or certain external economic factors.
Devaluation is carried out by state regulators to correct domestic financial policy. This is one of the ways to protect the ruble from the influence of other currencies that are more popular (for example, the dollar and the euro). The result of this policy is the establishment of a course close to the real one.
This procedure is carried out in a number of other countries. Its main drawback is that ordinary people always lose for the reasons indicated above. Every citizen begins to think about preserving their savings, that is, reducing losses associated with the depreciation of the ruble. Experienced market players prefer to invest in securities, but there are other assets as well. If you choose the right tool, you can not only save the money you earn, but also multiply it.
Devaluation brings certain benefits as well. Hardest from falling national currencies win import substitutes, commodity monopolists and even ordinary citizens who receive salaries or have savings in another currency, for example, in USD.
In some cases, this phenomenon is beneficial for the state itself. As you know, the economy of the Russian Federation is largely dependent on world energy prices. When the price of oil fell, the government was able to partially compensate for the losses with the help of devaluation. The value of the ruble is declining against the backdrop of a fairly strong dollar and euro, but national budget expenditures are calculated in rubles. Thus, it is possible to reduce the budget deficit.
There is also a so-called open ruble devaluation... If the market is oversaturated with foreign money, Central bank withdraws part of the currency from circulation. As a result, the ruble price declines in relation to popular foreign currencies, people are beginning to acquire cheaper national currencyhanding over the dollar and euro.
Consequences of devaluation
All current risks of ruble devaluation are due to the strong dependence of this currency on USD... This has become especially noticeable since 2014, when Western states introduced economic sanctions against the Russian Federation. The state was forced to launch a devaluation mechanism, effectively putting its own citizens at risk. The main consequences of the depreciation of the ruble for the Russian people are:
- Decrease in consumer demand against the background of constantly increasing prices for goods and services;
- Decrease in the volume of imported goods on the Russian market;
- Lack of competition, leading to an increase in the cost of domestically produced goods;
- The desire of citizens to go to work in other countries (labor migration);
- Devaluation of ruble bank deposits.
Devaluation also affects Russian enterprises that purchase raw materials abroad. As a result, many companies have gone bankrupt, while others are forced to increase the cost of goods produced. All this has a negative impact on the economic situation in the Russian Federation.
The changes in recent years are hitting the wallet of ordinary citizens. Every time the value of the ruble decreases against the backdrop of the strengthening dollar and euro, the life of office workers and self-employed worsens. Even if a citizen receives a salary in foreign currency, losses are inevitable, since the rise in prices significantly exceeds the rate of devaluation.
How to reduce dependence on the national currency
No one will be able to avoid the consequences of the decline in the value of the ruble, since the control over the market is carried out by the state itself. Before another fall national currencies you should think about: how much to leave in rubles for everyday expenses, and how much to invest in other assets? When it comes to large amounts, it will not be superfluous to turn to a financial analyst.
The urge to put all your eggs in one basket is something that is common among financially illiterate people. It is best to channel free funds into various projects: online forex exchange, purchase of Google shares, cryptocurrency assets, proven business, profitable bank deposits. Even in the event of a default, one or even several directions will help to save funds and even increase the amount of savings.
Such decisions, necessary to preserve hard-earned money, are forced to make not only citizens of the Russian Federation, but also Poles, Romanians, Greeks, Ukrainians and residents of the Baltic states. The economies of these countries are also heavily dependent on the dollar and the euro.
There are situations in which even the most profitable investments will not allow you to save money. For example, in 1946 the inflation of the Hungarian national currency was 400% per day. In such conditions, it is difficult to find a good financial instrument for investment. But, such phenomena are rather an exception. In a number of countries, including Russia, inflation is up to 15% on an annualized basis. In this case, it is easy to find several instruments for profitable investments that will pay dividends.
What is competitive devaluation
Probably, many people know about trade wars (for example, those that were fought between the United States and China). However, there are also so-called currency wars. Some states use currency as a way to put pressure on a particular country. Only devaluation can get rid of this influence.
Currency wars are another reason why the Russian ruble is depreciating. You can minimize the risk of losing funds due to currency wars by using fiduciary... A good company with experienced experts will help you find the best investment tool. Register in the chat of the robot signals to always be aware of all the news in the world of the economy, on which the integrity of your savings depends. And also to be able to choose the best areas for investment.
Will devaluation continue and what will happen next with the ruble?
The current situation is often compared with the events of 1998, when, in response to the government's statement about the impossibility of servicing external debts, the ruble rate dropped by 4 times. At that time, Russia's GDP was comparable to those of Hong Kong, while the amount of external debt was almost equal to the volume of GDP. Central bank sought to maintain the exchange rate, pursuing a tight monetary policy, making huge borrowings both domestically and abroad. In 1998, oil prices plummeted, which contributed to the devaluation of the ruble and the default.
In 2020, the GDP of the Russian Federation is more than 3 times higher than that of 1998. Moreover, the current public debt makes up an insignificant part of GDP. However, in March 2020, Russia faced an unprecedented fall in energy prices driven by the epidemic. coronavirus infections. But even under such conditions, the ruble can stay afloat, since the National Security Fund has accumulated 13 trillion rubles for a "rainy" day. In addition, the Russian Federation possesses rather large volumes of gold and foreign exchange reserves. So, the state approached the current crisis much more prepared than 22 years ago.
But devaluation of the ruble in simple terms as a simple devaluation national currencies against the currencies of other states has already occurred and continues. Since the beginning of 2020, the ruble has "sank" by 23% against the dollar and by 32% against the euro. And this is not the limit, since geopolitical differences and sanctions threats are only getting worse. Despite the presence of a "capsule" in the form NWF and good gold and foreign exchange reserves, the risks of a depreciation of the ruble and a fall in real incomes of citizens of the Russian Federation cannot be canceled. According to the data Ministry of Economic Developmentreal incomes of the population by the end of the year will decrease by another 3%. And this is directly related to the devaluation.
Yet devaluation is not a reason for panic and reckless action. You need to collect your savings and invest profitably in various projects, be it buying a crypt, stocks, or even simple bank deposits. All of these options will help protect money from quite foreseeable circumstances.
Any, even the strongest, currency loses in value from time to time. The value of currencies depends on various political, economic and other phenomena. Fluctuations in exchange rates always affect the purchasing power of citizens. To create a reliable airbag, it is necessary to regularly monitor the market situation, study return on investments in certain assets, strive to improve the level of financial literacy. The biggest mistake at the moment is to keep money “under the mattress” and regretfully watch it lose value.