Конференция «Сучасні тенденції інноваційного розвитку держави в сфері соціально-економічних наук» (13-14 марта 2014г.). Поступившие работы

Dubrovina K. V., Mudrenko A. A., Nikolaev T. G.

Oles Honchar Dnipropetrovsk National University, Ukraine

PROS AND CONS OF CASH SAVINGS IN «EXOTIC» CURRENCIES IN UKRAINE

The world’s latest financial crisis has led many people to doubt the efficiency of the bank industry. Instability of the dollar, euro and hryvnia exchange rates,  intensive  usage of a «printing machine» method, which results in overabundance of unsupported dollar mass, and of course the great amount of the USA’s public debt give pause to many depositors, who then start looking for alternative ways to store their money.

A lot of people continue putting their trust in freely convertible currency, simply because they’re used to it, still hope it will stabilize in the future or just don’t know better ones. Others keep their cash at home or prefer to invest their savings in precious metals or physical assets. However, there is no guarantee that those investments will result in profit, so it’s important to review other possible cash savings options. One way to do it is to save money in «exotic» currencies, i. e. currencies that aren’t commonly used in a specific country. In Ukraine those are, for example, the Swiss franc, the British pound, the Japanese yen or the Chinese yuan.

In particular, according to Prostobank.uа, every other Ukrainian citizen (50.52 % of the respondents) considers the US dollar to be the best currency for saving their money. The other half of the surveyed (48.96 %) wants to save money in euros. Only one fifth of the polled (20.21 %) would include the Russian ruble to their currency basket. British pounds and Swiss francs are even less popular and are held, respectively, by 18.65 % and 16.84 % of the voters. And only 3.37 % choose the Japanese yen as a viable option.

But perhaps, the Ukrainians should give «exotic» currencies a chance. To know for sure, let’s review all the advantages and disadvantages.

We should consider the above currencies a promising choice for cash savings merely because of the statistics: in the last three years the value of the Swiss franc, the British pound, the Russian ruble and the Japanese yen has been increasing stably on account of hryvnia’s depreciation. Of course, there have also been essential oscillations in exchange rates, but in the long haul there is a tendency for value to rise. For example, Swiss franc/hryvnia exchange rate has increased by 110 % since 2007 while USD/UAH exchange rate has risen only by 60 %. It’s obvious which is the better choice of the two currencies.

But despite the comparative gain it’s still not easy to buy or exchange Swiss francs, pounds or yen in Ukraine. Among large banks Ukrsotsbank and Raiffeisen Bank Aval offer Swiss francs, the latter one includes British pounds to its services. Ukreximbank, Pravex-bank and Financy i kredit give a wide choice of currencies to their customers. But the majority of Ukrainian banks only provide the usual currencies: dollars, euros, rubles.

But even if you manage to find a bank willing to sell you Swiss francs, there could still be some problems. For example, the bank can run out of cash in desired currency or have it only in insufficient amounts. Therefore buyers should order the required amount in advance and preferably – in the bank’s headquarters.

Keeping money in a foreign currency can save its value, because it won’t be affected by hryvnia’s depreciation. However, if you want to put your cash in a bank and earn interest, you’ll soon learn that there aren’t many possible offers for a deposit account. Only few banks let their customers open an account in pounds or Swiss francs and a few financial establishments will accept ruble deposits. But none of Ukraine’s 50 leading banks takes yens.

The reason for that is the fact that banks have limited options for investing that money. In general, those funds are used for giving loans in the same «exotic» currencies, and those loans are not very popular in our country. That explains low demand for deposit accounts. Another problem is that depositors find it hard to keep track of all the changes that happen to exchange rates of the «exotic» currency in the foreign markets or to make forecasts for the future.

Therefore the best decision would be to balance the amounts of every currency in your savings portfolio according to present market trends and conditions. This strategy will allow you to diversify the risks and increase the amount of your funds.