First published on the NIDO Russia Telegram channel.
Dear NIDO Russia Members,
It is our duty to represent your best interests especially in these challenging times and one of the ways we can do that is by keeping you informed and helping you stay ahead of the curve. Please take note of the following economic trends.
For the week from February 26 to March 4, prices increased by 10.42%. There has not been such a record price increase since 1998 - Kommersant
According to the Central Bank of Russia, inflation is expected to be at least 20% till 2023. Recall that, Russia does not have access to $ 300 billion of gold and foreign exchange reserves of the Central Bank due to sanctions according to the head of the Ministry of Finance of the Russian Federation Anton Siluanov aired on the TV channel "Russia 1".
NIDO Russia recommends the following:
1. Purchases cheap/undervalued shares with proper risk management in your portfolio. Shares for many companies are generally considered undervalued.
2. Invest in deposits that offer rates up to 20% per annum rates. This is one of the highest risk-free rates offered so far. Please take note of the limitations of the Deposit Insurance Agency and credit rating of the bank. Recall that, NIDO Russia has already published 7 debit cards with MIR or Union Pay that can be used to make international payments. These banks also offer fixed deposits similar to the key interest rate.
3. Do not rush to change rubles to dollar unless you expect the rubles to fall by more than 30% from the current value. There is now a 30% commission in changing currencies at the forex level. It also reflects the premium set by banks. We cannot speculate or advise with certainty concerning the movement of the ruble.
4. Real estate investment based on mortgage and without state support is generally considered toxic at the moment. Such purchases can be postponed to the end of the year. While loans are expensive/unsustainable and should normally cause a reduction in demand/price in real estate, it is not enough to cause a significant downward pressure on prices due to:
a) the rising cost of building materials
b) high demand to move liquid money to assets to beat inflation
c)expensive rate of loans by creditors (especially in foreign currency) and
d)the upward pressure exerted by increase in rental costs.
5. Special economic measures introduced at the level of the Finance Ministry and Central bank of Russia are expected to last till at least September irrespective of the outcome of negotiations by Russia and Ukraine.
6. We see no need to overstock your fridge/home with food items for 3 reasons
a) Russia generally has food security. It spends up to 4% on GDP to achieve that.
b) Special economic measures are currently taken to ban export of strategically important food products
c) Many food items have expiry dates and you stand the risk of having expired food products when overstocked or stored improperly.
An exception is if you depend on imported goods for which there are no possible import substitution or plan to resell in the nearest future.
Don't hesitate to contact us for enquiries/clarifications. We also have lots of experts and economists amongst us, please add your opinions in the comment sections. Share with family, friends and loved ones residing or doing business in the Russian Federation.
Yours in Service,
Dr. Godwin Ibe
Chairman, NIDO Russia
