In What Currency Azerbaijanis Keep Money in Bank?
Azerbaijan, Baku, 23 October / Trend /
Leyla Abdullayeva, expert of Trend Analytic Center
Today, when the credit crisis strike the liquidity of the world banks, and due to the current dynamics of world currencies, the Azerbaijanis began to worry - in what currency to place money in the banks and to place them generally?
The inflation, which collects rates in the country, distressed the citizens, who intend to keep money in the banks. The worst indices were fixed with regards to the dollar deposits. A drop "in the American" in relevant to AZN due to the high inflation led to the depreciation of savings in the dollar deposits irrespective of the period of deposit. Until August, when an increase occurred in the exchange rate of the Euro to AZN, the savings were advantageous in the European currency. But furthermore, if to take larger interval of time, then as a result of year, the savings in the Euro also show negative profitableness.
Also, in spite of the July deflation because of the sharp fluctuations of exchange rates, large part of our investments was unprofitable. Thus, for instance, those, who in the beginning of summer put money into the cash currency, incurred losses because the exchange rate of the Euro to manat fell below AZN 1.095 in autumn for the first time. In October the exchange rate of the Euro to the national currency of Azerbaijan reduced by 7.2%. Already on 1 July the rate composed AZN 1.279 for the Euro, and as a whole since the beginning of the year, the exchange rate of the Euro to manat reduced by 12.1%.
Today manat deposits for the period from 9 to 12 months remain most attractive. The real profitableness of annual manat deposits is the sustainable. In this case, the rate in the deposit approaches the maximally possible inflation with the forecasted level. Manat and dollar deposits without the possibility of replenishment and removal of funds bring averagely 12% per annum, in the Euro - 8%.
Today it is reliable to place money in the noble metals because gold is less subjected to inflation and is liquid asset. However, investing into this precious metal, it needs to consider that it is necessary to invest in this asset for a long period - optimally for five years, specialists say. At present the banks propose five percent of the annual earning on them.
Summing up the aforesaid, it is possible to make the following conclusion: if there is a desire to keep the savings precisely in the form of money, then for this it is more advantageous to use manat because we spend them in this currency, especially if these are small amounts. Large amounts of cash resources are nevertheless better to be kept in the Euro. Even in spite of drop in its rate with respect to manat, this is the most stable currency in the market at the given moment. If there is a desire to obtain sharp sensations from the risky operations, it needs to keep the accumulations in the dollars. Since the opinions of bankers relative to USD rate in the end of the present year are diametrically opposite, there is a chance both to increase its state and to lose substantial part of the accumulations.
However, to keep money without investing anywhere is not an accurate strategy. Inflation according to the results of 2008 can reach even larger indices, correspondingly, this will depreciate money "under the pillow". In order to avoid this situation, it is possible to place money in the deposit in the reliable banks, but firstly it is necessary to be sure whether your bank is burdened with the foreign debts. And in this situation the banks can substantially raise the interest rates on the deposits to attract depositors and create more attractive conditions, as many banks already made in Russia.
Generally there is no sense to raise panic on the financial crisis in Europe - domestic banks were reliably insured from this. Moreover majority of them were included in the system of insurance of deposits, which will make it possible for depositors to, at any moment, obtain their deposits without any special problems. Finally it is possible to advise to distribute accumulations between several more stable banks.
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