Best Savings Currency

MOSCOW, February 27 – RIA Novosti. The best currency for savings this spring will be the dollar, since the “personal” currencies of European countries, as well as many developing and commodity economies, risk losing value to the “American” in the coming months, Dmitry Babin, an expert on the BCS World of Investments stock market, told RIA Novosti …

“The potential for further growth of the favorites of the last year, which in recent months have become outsiders – first of all, non-euro currencies of European countries, – on the horizon of 6-12 months is limited, and the risks of a decline against the dollar are high. The same applies to many emerging and commodity currencies, which took the lead in 2021 thanks to the rally in most assets, including commodity ones, “he commented on the issue of foreign exchange savings.

“Consequently, to hedge currency risks now, the bulk of investors' investments must be denominated in US dollars,” the expert added.

Babin recalled that currencies themselves have relatively low volatility, which is a necessary property for them to perform the functions of a means of payment and savings. Persistent fluctuations in exchange rates are most often caused by either depreciation of currencies due to fundamental factors, or a change in the value of the dollar.

In the last nine months, the second situation has just been observed: most currencies have significantly appreciated against the dollar, and the profitability of assets nominated in them has decreased, almost depriving them of the risk premium.

“This applies to both developed, mainly European, and developing currencies. The same currencies that are still undervalued against the dollar carry non-market risks – for example, the ruble, which is under pressure from geopolitical threats,” the expert explained. …

Author: wedocount

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