Russians buying US dollars on hard times

Discussion in 'Current Affairs, News and Analysis' started by ghost_us, Dec 5, 2008.

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    Makes you wonder. With a nation that wants to be the "Defacto Financial Model" would have it's citizens buying US Dollars in periods of uncertainty due to it's relatively stable value.

    Any comments on this Sergey? Why would Russians be buying "infected" US dollars?
  2. I don't know why they do it, but I think there can be two reasons to it:
    1. Ukrainians started panic buying $$ in Russia last month;
    2. Russian banks are "throwing" $$ at the inflated rates.
  3. Why do people buy foreign currency, shares of foregn firms, gold, bonds and so on and so forth? Apparently to make profits, to save their money (especially in turbulent times).

    Suppose that you had 60,000 Pounds just few months ago. You could buy 120,000 Dollars and now return 80,000 Pounds with lovely 20,000 as a profit. There is only one problem - such operations are risky. Instead of profit you could lose.

    There was severe economical crisis in Russia in 1998. I kept my modest savins in dollars ($6000). I planned to buy Russian made car that costed $7000. As a result of the crisis Rouble fell 3 times against dollar and the price of the car became only $4500. So I baught with pleasure. But those who kept their saving in Roubles lost bitterly.

    Now the situation is quite different. Rouble is relatively stable agaist Dollar/Euro basket. While dollar became more expensive, Euro now is cheaper than this Summer. Yes, some Russians remembering 1998 try to buy Dollars and Euros but there is an attractive alternative - deposits in Roubles.

    Now it is possible to make deposits with 15% interest rate in reliable bank (in the case of bankrupcy money will be returned by state agency if the deposit is less than 20,000 Euro).

    So personally I don't plan to buy Dollars. However I understand pretty well those who buy. Too frequently people was fooled by government in Russia (in Soviet times and later).