Why does ruble become one of strongest currencies in 2019?
Russia's financial environment is improving, and the ruble remains stable regardless of political news, becoming one of the strongest currencies in 2019, according to the article entitled 'After the sanctions and oil shocks: that's why the ruble is returning', published in Germany's Focus magazine.
According to the author, after the decline due to Western sanctions and lower oil prices, the ruble was able to significantly strengthen against the dollar and the euro and became one of the strongest currencies among developing countries this year.
Due to the decline in returns in Europe and the United States, investors increasingly invest in Russian currency, there is high demand for it, the publication says.
From the point of view of international investors, Russian government bonds are a reliable investment tool, the author added.
Earlier, the Fitch rating agency upgraded the long-term sovereign credit rating of Russia to BBB.
Head of the State Duma’s Committee for Financial Markets Anatoly Aksakov, speaking to Vestnik Kavkaza, noted that the Russian economy is one of the most stable in the world and the least exposed to all kinds of risks. "The first reason is the reasonable monetary policy of the Bank of Russia on using the budget rule. Our international reserves exceed 530 billion rubles, it's more than the external debt of the state and private companies. The state debt is very low. Even if suddenly a new global crisis breaks out, its consequences will not be as serious as five and ten years ago, since the Russian economy is now less dependent on fluctuations in foreign markets and on oil prices," he stressed.
"Now we can say that the ruble is underestimated by about 30%, since international reserves are stable, the economy is stable, and the Bank of Russia and the government have reliable control over the financial system. Only geopolitical factors lower its value," Anatoly Aksakov added.
"The growing interest of foreign investors in the ruble is significant, primarily from the Americans. They buy government bonds, OFZs and private business bonds. This is due to the fact that everyone sees the Russian economy's reliability and stability. It’s not without reason that international rating agencies improved Russia's sovereign rating. Russia's trade with Europe, the United States and Asia is growing rapidly, despite the sanctions," the head of the State Duma’s Committee for Financial Markets pointed out.
The professor at the department of the stock market and investments at the Higher School of Economics, Alexander Abramov, noted that Russia currently occupies a rather unusual position in the global financial market. "Among the developing countries, Russia is one of the few that have investment ratings, a very good macroeconomics, low inflation, budget surpluses, a large balance of payments, and so on. In this regard, Russian bonds really are in great demand among investors," he explained.
"At the same time, Russian currency bonds are very small in volume, and there are constantly risks of sanctions, therefore non-residents are not recommended to invest in Russian bonds. If there were no sanctions, foreigners would gladly invest in ruble bonds," Abramov emphasized.
As for the ruble, it remained stable all year. "This is a completely natural phenomenon, because there were fairly comfortable oil prices and a stable budget this year," the economist drew attention.
"For the ruble to become an investment currency, it should be trusted in the long run, and trust means the absence of conditions for devaluation. As long as they remain, which makes it difficult to use the ruble as an investment tool," Alexander Abramov said.