Keep making the same mistakes

Many years ago some people asked me which currency (USD, EURO, CIF) is better too keep their money.  My answer was: “It does not really matter which currency of these you chose. The only think you shall clearly know is youshall not keep your money in Rubles”

Its easy to plan your budget in third-world countries – just make it in USD or EURO and keep your money in this currency. Since 1917 the best investement in USSR then in Russia was the dollar. Time to time you’d just double or triple your money.

Look at the diagram below. Year 1992: one USD cost 0,3 Rubles (300 ‘old’ Rubles, as denomination in 1998 ‘cut’ three nulls). Taking the actual exchange course as 60 rubles/usd it’s easy to see it changed in 200 times

What the conclusion you make doing your busness there? Always hedge your risk. You shall know what happend if Rouble loose 50% of its price. If you do not know this – better do not start. From the other side, this is not too complicated, becauseit needs to hedge only to one direction of change of rouble exchange rate: down.

Another diagram shows relatively stable period in Russian history, and it is not stable:

So, the Business in Russia is highly depended on RUble exchange rate. This is even more imporant factor than sanctions and political course. The move of market demand can be 10-20 even 50% in short time (weeks), if currency rate dramatically changed.