Russians lose interest in the dollar, but they evince no interest in the euro
The interest in the US dollar has been going down since the start of the new year. Even the most cautious Russians realized that the American money had brought them no profit, but loses. Experts point out the increased interest in the national currency – the ruble - thinking that the decreased interest in the US dollar is a serious trend. However, everything that happens has certain consequences, and the dollar's demise is no exception.
The Central Bank of the Russian Federation has made public data pertaining to the import and export of cash dollars into and out of Russia. According to the information from the Central Bank, Russian banks imported $119 million in March and sent $260 million abroad. This is definitely a record sum for Russia. The Central Bank said that was the amount of cash dollars that had been legally taken out of Russia over the whole of 1999. In addition to that, the year 1999 was an uneasy one from the political point of view: it ended with the early resignation of Russia's first President, Boris Yeltsin.
Last year Russian banks exported a monthly average of $93.5 million. Experts explain the dynamics through the fact that the Russian people have lost their interest in the American dollar. The continuing reduction of the dollar against the ruble has already resulted in a considerable devaluation of people's dollar savings. Vladimir Gudilin, the chairman of ROSBANK's currency department, told PRAVDA.Ru in an interview that the Russian people are converting their dollars into rubles and then either spend the money or make more lucrative ruble deposits. Mr. Gudilin said that this does not mean that Russians are more attracted to the European currency, the euro. Selling dollars and then buying euros with rubles is a very unprofitable operation in Russia. Furthermore, there are very few cash euros in Russia at present.
Vladimir Gudilin also explained that US dollars make up to 90 percent of the export profit in Russia. To crown it all off, Russia is still a dollar-oriented country. That is why, the scope of the escape from the American currency is a lot less than it could be. As a result, many excess dollars accumulate in the country: there is no demand on them and the Central Bank is unable to buy them. This makes banks get rid of them: a lot of Russian banks reportedly prefer to send back up to $900,000 from every million dollars that they receive.
It goes without saying that Russian exporters have to face certain problems because of the dollar’s reduction. If a Russian company receives profit in dollars, it will be hard for this company to pay for the services of a foreign company or purchase goods with euros. However, some companies have already managed to obtain very good profits with the help of the dollar-euro divergence too.
Vladimir Gudilin, the chairman of the currency department of ROSBANK, said that if someone has not managed to get rid of their dollar savings, they will have to wait a while. Most likely, the tendency will change during the second half of the current year, when the dollar is to strengthen against the Russian ruble. For the time being, the best thing for Russians to do is to keep their savings both in euros (20-30%) and rubles (30-40$), keeping the rest in dollars. For the time being, Russian banks continue to take redundant dollars back to the USA. However, tons of dollars are expected to return to Russia as early as autumn. According to experts' estimates, the strong ruble is not good either for the Russian economy or for Russians. Therefore, the ruble's strengthening will not last long.