By Alexander Burmistrov
According to specialists, bank savings are the most universal investment instrument, although some Belarusians still prefer to save cash at home: in a wardrobe, bedside table or under a mattress. However, despite limited alternatives, some other avenues of saving do exist. Which will be the most profitable by the end of the year?
‘Rouble optimism’ remains
Vladimir Savenok, a financial consultant and the Head of the Personal Capital Consulting Group, tells us, “You don’t need to be an expert to understand that, at present, the most profitable instrument of saving is the Belarusian Rouble, since it offers a rate hardly found elsewhere. Other instruments are far more modest, with gold values rising by just 10 percent since the beginning of the year. Meanwhile, bonds offer a return limited by initial terms. However, Belarusians bonds circulating abroad (Eurobonds) have risen in value by more than 15 percent since early 2012 — in US Dollar equivalent. They began low due to last year’s crisis and are now offering a return of around 8 percent per annum (for minimum investments of $100,000).”
He adds that other instruments in Belarus — offered by credit unions and similar institutions — are unsecured, with no guarantee of return if crisis hits. Their high interest rates, which often exceed those of the bank market by several points, need to be viewed with caution. Early in the year, the National Bank of Belarus offered very attractive interest rates for deposits in national currency: 44.7 percent per annum for deposits of up to one year and 46.8 percent for longer periods. By September, rates were more modest: 29.2 percent and 28.2 percent respectively. However, by October, these had risen to 33.7 percent and 38.7 percent.
Banks are clearly reluctant to offer greatly higher rates for longer term savings, since they are unable to place such money at a higher long-term rate themselves. Nevertheless, Belarusian Roubles remain one of the most efficient forms of saving. They even offer a profitable return, since the official level of inflation stood at almost 20 percent in November (around half of the rate being earned by national currency deposits in early 2012).
Passive savings lack effectiveness
Moods in the banking sphere do influence depositors. By the end of the year, expectations of devaluation traditionally grow strong in Belarus, with many believing that it’s not wise to meet the holidays holding Belarusian Roubles. “What are the prospects for 2013? In the absence of investment diversity, I’d recommend foreign currency savings — in US Dollars and Euros: either held with banks or as cash,” Mr. Savenok is convinced.
Vladimir Tarasov, an observer with Belarusy i Rynok (Belarusians and the Market magazine), doesn’t agree completely, noting, “I’d rather invest in Belarusian Roubles, since their interest rates will remain high, regardless of many forecasting a gradual weakening of their exchange rate next year; these high interest rates will definitely compensate.” As far as foreign currency is concerned, he doesn’t cherish any illusions, believing we’ll see a return of last year’s fluctuations; choosing during a time of growth is difficult, especially as rates can fall. In January, Belarusians were able to save foreign currencies with the bank at 7.9 percent per annum for up to one year or 9.2 percent for longer periods. By November, these rates had dropped to 4.9 percent and 6 percent respectively.
‘Mattress’ savings in foreign currencies have brought very little return, proving that money needs to be put to work rather than gathering dust. The exchange rate of the US Dollar has changed insignificantly against the Belarusian Rouble, only slightly exceeding figures from early in the year: in January, it stood at Br8,389.87, rising by October to Br8,525.53. The exchange rate of the Euro has also altered little, hitting Br11,050.56 from an earlier Br10,822.34.