IV.1. General information about the foreign exchange market.
The foreign exchange market on the MICEX allows a trader to speculate with the currencies of other countries or to bribe the currency to save the accumulated funds.
The life experience of Russians has taught them to bribe the currency to save their money savings from the unpredictable actions of banks that cannot cope with geopolitical activity in the world over the past decades (see Figure 121).
Only in the 21st century, the erasure of citizens’ savings in rubles was carried out repeatedly (Figure 121) and quite unceremoniously. Thus, since currencies can essentially be used as a hedging tool in case of unexpected falls in the stock market, an excellent strategy is to constantly replenish your personal currency account to protect your money. Please note that when trading on cryptocurrency exchanges, you immediately have an account in USDT or BUSD, i.e. USD equivalents, which gives additional protection to your financial interests. For 30 years from 1992 (April 1991, 1.75 rubles /$) to 2022 in Russia, the average inflation (weakening) of the national currency against the US dollar was (78/2)/30*100% = 130% per year! (see figure 121). In our opinion, the effectiveness of financial policy should be assessed precisely by the parameter of increasing the welfare of the least well-off citizen for the year in relation, for example, to the US dollar. I.e., we divide the average income for the year of a pensioner in $ by the end of the compared period to the income in $ per year by the beginning of the compared period. If this parameter is higher than 1, financial measures have not worsened the situation, if lower, then the population has been robbed again and the guilty financiers and pension reformers should be driven with a filthy broom.
Рис.121. Dynamics of the USD/RUB pair since 1992 (data from the Internet). For 1 US dollar: 1987 – 0.6 p. 1991 – 0.56 p. – The commercial rate of the State Bank in April 1991 was equal to 1.75 rubles per dollar, and the black market rate was 30-33 rubles. 1992 – 125 p. – Introduction of the free exchange rate of the ruble. 1993 – 417 p. 11.10.1994 – 3926 p. – Black Tuesday 1994. In one Day, the dollar exchange rate increased from 2833 to 3926 rubles for 1 dollar. 1997 – 5562 p. 1998 – 5.6 p. – denomination (8 months before default) 1999 – 20.65 p.
Figure 122. USD/RUB exchange rate change from 2008 to 2022.
Over the period from 2008-2022, the price of the dollar against the Russian ruble has changed by 424%! This is the answer to the question why domestic enterprises are always doomed to be in poverty, and American ones, on the contrary, always get richer – the rate of inflation is much faster than any profits of enterprises. Even the highest deposit rates (up to 24% per year in March 2022) in banks are not able to protect money in rubles from all-consuming inflation. But, it is worth converting rubles into currency and you can forget about inflation. This is exactly what the Central Bank does – it buys currency, invests in foreign currency assets. Weird, right? After all, he is from Russia!