By Julia Petrova
Over the last year, the number of Russian banks that offer retail customers savings products in the so-called soft currencies of "friendly" countries has more than doubled, and the range has ceased to be limited to Chinese yuan alone - deposits in UAE dirhams and Kazakhstani tenge have appeared on the market. Unlike the dollar and the euro, the protective properties of "friendly" currencies, which would help insure against the weakening of the ruble, are not so strong, and the prospects for growth in rates in the second half of the year are vague
What the banks offer
At the beginning of 2022, almost all banks offered savings products in dollars and euros, and deposits in yuan were exotic. In 2023, the alignment has changed dramatically: 57 banks offer customers 109 deposits and savings accounts in yuan. Meanwhile, deposits in dollars remained only in 19 banks, in euros - in 15, the Finuslugi project of the Moscow Exchange calculated.
In addition, deposits in UAE dirhams have appeared on the market this year: they can be opened at Sberbank, Credit Europe Bank and Metallinvestbank. And UBRD began to offer clients to save in Kazakhstani tenge.
At the beginning of August, average rates on deposits in yuan ranged from 2% per annum for three months to 2.4% for 12 months. The maximum rates on such deposits on the market reach 3.5–3.85% per annum, Igor Alutin, managing director of Finuslug, told Forbes. Banks have already shown interest in attracting yuan: over the past six months, the profitability of deposits in Chinese currency has doubled.
The average yield of new deposits in dirhams, according to Finuslug, is slightly lower than the yuan - from 1.95% for three months to 2.7% for the year. Deposits in tenge are the least profitable of the soft currencies, as they bring only 0.1% per annum. Due to the fact that savings products in dirhams and tenge are a new product on the market, banks have not yet reviewed their profitability, Finuslugi notes.
Will soft currency deposit rates go up?
Bankers polled by Forbes disagreed about the future dynamics of rates on deposits in yuan. Rather, here we are talking about a slight correction in the yield of yuan products, a Zenit bank representative admits. Rates will remain "approximately at the current level", since there are no obvious prerequisites for their change, agrees Alexander Borodkin, leader of the Savings and Investments tribe of Otkritie Bank. "Until the end of the year, we expect a moderate increase in rates on deposits in yuan," says Evgeny Vyatkin, Managing Director of the UBRD's Liabilities Raising Business Development Center, with optimism. VTB is also waiting for an upward correction in rates. Sberbank traditionally does not comment on the interest rate policy until the changes come into force.
Deposits in other soft currencies have no prospects for rising rates yet, bankers admit. UBRD does not plan to increase the yield of the tenge deposit yet, says Vyatkin. A dirham deposit is already being issued on “very attractive terms,” adds a Sberbank representative.
What affects the yield of deposits in soft currencies
For rates on deposits in hard currencies, the main indicator that banks around the world are guided by is the rate of the national bank of the country of origin of the currency. In addition, it is also important for banks to be able to place funds in this currency on accounts and in assets abroad or within the country in the form of interbank loans, corporate or retail lending in order to cover credit risks and operating expenses, Dmitry Monastyrshin, chief analyst at PSB, explains.
In the new financial realities, Russian banks have found themselves cut off from the financial infrastructure of developed countries, and access to emerging markets is limited due to fears of secondary sanctions from local players. This means that it is difficult to earn money in yuan, dirhams and tenge abroad and one has to rely mainly on domestic demand for loans in "friendly" currencies.
“The yuan market in Russia can be called localized, so interest rates are more dependent on the balance of the inflow of yuan into the country's financial system and their outflow,” says Natalia Vashchelyuk, chief analyst at Sovcombank. In such circumstances, the base rate of the People's Bank of China, she said, is secondary, and the yield on deposits has a chance to increase only when a particular bank decides to increase its portfolio of yuan loans. Representatives of small and medium-sized businesses demand for such loans is high, this will affect the rates on deposits in yuan, according to UBRD and VTB.
Dirhams are used to a much lesser extent in Russia's foreign trade settlements, Vashchelyuk continues. “However, it is likely that their role will grow in the future. In particular, India, with which Russia has a significant foreign trade imbalance, may increase the share of payments for Russian oil in dirhams. At the same time, Russian business has partially reoriented itself to the financial system of the UAE, and in the event of a possible inflow of dirhams, there will be demand for them both from companies and the population,” she is convinced.
The most vague prospects, according to Vashchelyuk, are for deposits in tenge. According to her forecasts, in the near future, the supply of such products will remain single, and rates - near zero.
Insurance for rubles?
The volume of funds of individuals on accounts in Russian banks as of July 1, 2023 was equal to 39.3 trillion rubles. Funds in foreign currency amount to an amount equivalent to 3.9 trillion rubles, of which 13% are in the currencies of “friendly” states, and 87% are in the currencies of “unfriendly” ones. Until the end of the year, the share of the yuan in the deposits of Russians may grow. For example, according to VTB forecasts, it will grow to 26% of all foreign currency savings, says Natalya Tuchkova, head of the Savings department of the bank. Earlier, the bank predicted that by 2026 Russians will get rid of dollar and euro savings in Russian banks.
Analysts polled by Forbes recall a number of features of soft currencies compared to the usual dollar and euro. The Chinese yuan has an opaque exchange rate that serves the interests of Chinese exporters and importers, and limited offshore yuan liquidity. The tenge is dependent on geopolitics and prices for raw materials that Kazakhstan exports. According to Andrey Maslov, an analyst at FG Finam, and Natalya Milchakova, a leading analyst at Freedom Finance Global, only the dirham is suitable for a hedge against the weakening of the ruble from this set, since its rate is rigidly pegged to the dollar. However, according to Maslov's forecasts, if the current situation persists, the yuan and tenge will not bring exchange rate surprises and will be traded in the usual ranges: the yuan is within 7–7.2 yuan/$, and the tenge is within the range of 435–460 tenge/$.
“The only reason to consider soft currency instruments as a currency risk hedge is if you plan to move to the relevant country or spend in these currencies over time. In other cases, the inevitable risks - low liquidity, wide buy-sell spreads and high volatility - outweigh the possible advantages," Evgeny Vorobyov, Head of the Credit Analysis Department at Ingosstrakh-Investments Management Company, is skeptical.
This article originally appeared in Russian at forbes.ru