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Russia is the largest country in the world, it has a population of 144 million and is rich in natural resources. Its currency is the Ruble. Russia’s economy is based primarily on exporting oil and gas recently is Crude and Refined oil, Coal and Wheat, it has also been making strides in IT and telecoms. Russia has the 11th largest GDP in the world. Investing in the Ruble is investing in all of Russia; the economics, the central bank and the local and international politics.
Russia has suffered a financial crisis between 2014 and 2017. Its population is decline to the loss of about 800,000 citizens a year due to their birth rate not being high enough.
On the 1st of January 1998, you could get 1 USD for 6 rubles, on the 1st January 2019 you needed 67 rubles for 1 dollar. The purchasing power of the Ruble has not held well in the last 20 years at least as compared to the US Dollar.
Russia’s Economic Risks:
The stock and regulatory markets of the modern west are more advanced and investor centric than those of Russia, this makes some investors hesitant to invest in the Ruble or the Russian economy.
In addition, Russia has been in conflict with the US and this sometimes results in tensions which impact the Russian economy directly. Sometimes this conflict results in trade and currency wars between the two of these powers or their proxies.
Most countries rich in Natural Resources, tend to overlay on this windfall for their economic growth, and Russia is no exception. Its main exports are natural materials, this makes Russia somewhat dependent on the prices of these commodities.
Inequality in Russia is high according to an EU Parliament report.
“Nearly half of pre-tax national income goes to Russia’s top 10 %, compared to around one-third in France; Russia has more billionaires relative to the size of its economy than any other large country. “ Inequality tends to breed discontent, which is never good for the currency or the economy.
Investing with the Ruble:
The ruble is one of the oldest European currencies in Europe. Investors holding Rubles are betting on there being more demand than supply of Rubles, to this end Russia has been trying to trade directly in its currency with other countries and to create alternatives to SWIFT.
Central banks reserves are important because they provide trust and a means to back a currency. Russia has been one of the most important buyers of gold among central banks, and it accounts for 6% of total global gold demand. Russia’s central bank holds 19% of its reserves in gold.
Using Mintos to invest in the Ruble:
- An easy way to invest in the Ruble is to invest in peer to peer lending loans denominated in the Ruble. Learn more: What is p2p lending?
- There are two ways to do this, the first is transfer funds from your base currency and then change it to Rubles on the Minots platform, or to use Revolut to transfer funds to Mintos.
- On Mintos, these loans currently have the highest interest rate: 18%. Great returns mean great risks.
- These risks come from different angles, the first is the default of the loan originator and the loss of value of the Ruble, or new economic regulations or sanctions which would limit such investments, the loss of purchasing power of the Ruble.
- The advantages of investing in Ruble p2p loans is the high-interest rates offered (at the time of writing) and the potential upside (or downside) of the Ruble compared to your base currency.
- When investing in the Ruble using Mintos, you care about making 2 investments. The first is in the p2p Ruble denominated loans and the second in the Ruble itself.
You can invest in the Ruble easily by using Mintos. When doing so you diversify your portfolio and diversify your risks.
Let us know your thoughts:
What do you consider the main risks of investing in the Ruble?
How do you manage these risks?