Not as easy as it looks

Funny money

Amongst unconventional investment-worthy currencies, the Russian ruble may become the record holder for profitability this year

Not as easy as it looks

This year investors might be able to profit from investing into unconventional currencies. Gradual fading of the debt crisis in the Euro zone and stabilization of economic growth in the US and China should heat the interest in riskier assets, including a range of currencies. Growth of demand, as it is generally known, is a motivating power for exchange rates: a number of currencies are destined to grow more expensive as they become more popular among investors. However, it is not certain that ordinary Ukrainians will profit from that.

Part of the reason for Ukrainians getting left behind in the currency game is that the process of investing into unconventional currencies is complicated. Choosing an optimal investment currency requires evaluating its potential growth on the FOREX market, as well as its spread in the process of buying/selling on the Ukrainian market, and the potential for devaluation of the local money, the hryvnia.

Another reason is the availability of deposit offers by banks in such currencies, which may affect the profitability of investments. The overwhelming majority of domestic financial institutions will be able to offer deposits in British pounds, Swiss francs or Russian rubles. However, deposits in the first two currencies are only available in the form of private banking for clients with a lot of money. Deposits in Australian dollars, Japanese yen or Chinese yuan remain a pipedream.

“The banks, when attracting deposits in unconventional currencies, must understand what to do with these deposits and how to profit from them. Allocation of loans in foreign currency for regular people, including unconventional currencies, is prohibited. Crediting of legal entities in unconventional currencies is either uninteresting for clients or too risky for banks. As for the international currency market, only a few Ukrainians banks are players on it,” explains Chief of Product Development Department at PJSC “Bank of Cyprus Anna Makarenko.

In addition, in order to place funds that will earn a profit, banks must attract them at minimum price (interest rate). Low interest rates, however, cannot attract Ukrainians, who have been spoiled with high rates on hryvnia and dollar deposits. “It is not worth considering deposits in unconventional currencies with the objective of gaining high profit. The average interest on the market is around 3-4%, while the offers of such products in the Ukrainian banks are extremely rare,” says Kateryna Fedorovska, Director of Retail Products Department at VTB Bank.

According to ProstoBank Consulting, the maximum interest rates on hryvnia deposits in Top 50 banks were 27% and on dollar deposits – 12% by mid-January. For comparison, the annual rate of return of deposits in British pounds and Swiss francs for an average of 5-6%, Russian rubles - about 7%. It is not surprising that the citizens have not paid much attention to such deposits. In the beginning of 2012, the volume of deposits in unconventional currencies amounted to UAH 3.38 bn in hryvnia equivalent, while as of December 1, 2012 it was only UAH 2.44 bn. Their share in the total volume of the deposit portfolio of the banking system dropped from 1.09% to 0.67% over 11 months.

Дата добавления: 2015-11-14