Russian currency is an old currency that has been in use for nearly a thousand years. Despite the different currencies that have existed since then, the Russian ruble remains one of the top currencies around. It is still used today for all things economic in Russia and even in some other countries as well. As the global currency and demand for it, the current market value is propped up by a lot of factors. However, the following 10 signs will help you weigh whether investing in Russian currency 100 is worth your time and money.
1. Double-Digit Inflation
Russia’s inflation rate is currently at a double-digit figure, which pushes up the value of their currency against other currencies. For example, in 2012 the Russian ruble was 100 to one U.S. dollar. It is the most obvious thing that will give you a pretty good clue. Double-digit inflation means that the government, who is desperate to prevent hyperinflation, has to print more currency. As more currency makes its way into circulation, supply is greater than demand so prices drop.
2. Historically Low Interest Rates
Central banks, who want to keep inflation under control while encouraging lending, may lower interest rates. The lower the interest rate is, the cheaper the debt is in terms of what you will gain. This can be seen as a good opportunity to invest in Russian currency. As mentioned before, hyperinflation will cause interest rates to drop as investors seek safer investments. When banks set their rates close to zero, you should start thinking about investing in Russian currency.
3. Discount Stores on Every Corner
When hyperinflation happens, you can find shopping carts filled with groceries piling up outside of discount stores. This is because the government will produce a lot of it and ask for its people to exchange their older bills with new ones.
When gas prices go up and the economy is bad; consumers are looking for deals wherever they can find them. Discount stores will be doing a great business during these times, so you know things aren’t looking good.
4. Exclusive Economic Zone or EEU
The creation of the Eurasian Economic Union was a stab in the back to the U.S. and Europe, as Russia and their partners look for an alternative to their economic troubles. The EEU is a new economic union hoping to rival the EU and bring about world peace through trade restrictions and tariffs on western goods, keeping them out of Russia (and the rest of member states).
5. Agreements with China
When Russia starts looking to China for loans and investments, this can act as a strong indicator that they are in dire need of help. There have been many rumors floating around in recent years about agreements with the Chinese to improve the infrastructure of Russian cities and develop the stability of their currency.
6. Black Market Trading
If there is one thing that will never disappear, it’s the black market. When there is a rise in the demand for a certain good but an insufficient supply, people will be willing to pay more on the black market than at any store for the same item. This would be a good indication that you should start saving in Russian currency.
7. Unexplained Deaths
When there is a bad economy and the government is desperate for money, corrupt officials will look to extort the population to make more money. This leads to deaths at the hands of Russian officials and can be used as another indicator that you should start investing in Russian currency now.
8. Major Mining Accidents
Mining accidents are some of the worst in human history, so when there is a major mining accident in Russia, it’s safe to say things aren’t looking good. It’s not only Russians who die in mining accidents, they can also lead to an environmental disaster such as radioactive waste or hazardous emissions that injure multiple workers.
9. Legislation
If a country enacts new laws that have a negative effect on the population, it’s safe to say that they are desperate for help. Putin signed into law the “non-governmental organization” (NGO) law which prevents any foreign funding for NGOs in Russia; this is a major step towards isolating Russia from Western countries.
10. Currency Devaluation
When a country’s value begins to decrease rapidly, this is an easy way to determine that it’s in need of financial help. This can be seen when Russia devalued its Ruble by 10 percent in a span of one day. This one goes without saying; if you see your currency devaluing rapidly, it’s best to think about diversifying your funds before your money becomes worthless.
Summary:
The aforementioned 10 signs can help you determine whether investing in Russian currency is worth it or not. However, they don’t take into consideration the future and cannot avoid the worst scenario. So, stay vigilant and keep an eye out on the situation in Russia.
