Looking at the constant fluctuations of the ruble against the foreign currency, many citizens forget that they have already experienced such phenomena. Even countries with a stable economic environment have to face a crisis and a weakening national currency. Most often this happens with states that do not have a strong financial system and lack a competent government policy to prevent a possible collapse of the currency and eliminate the consequences of such an accident.
Recent trends in the global economy clearly demonstrate that Russia needs to radically change the vector of its economic activity. The protracted currency crisis of the last year has a much more serious effect on every citizen of the country than the short-term collapse of the ruble in 1994, which economists and the media called “black Tuesday”. What happened then and how to avoid similar problems in the future?
Is the dollar exchange rate important?
The stability of the national currency against external macroeconomic factors, as well as the domestic political and economic situation in the country, is an indicator of its maturity. Even the seemingly cheap differences in the course can cause negative consequences for the country's budget, and what can we say about colossal swings.
While only bankers and economists notice small fluctuations in the foreign exchange market, ordinary citizens cannot but take note of the rapid growth and decline. And as practice shows, in such situations, panic prevails among the population. Trying to sell cheaper foreign currency as quickly as possible or, conversely, to buy more scarce goods, people exacerbate the situation. Black Tuesday in 1994 showed panic in society. Everyone rushed to the exchange offices and banks, which jeopardized the very existence of the country's financial system and forced the authorities to take extreme measures.
Ruble collapse history
Over the short period of the formation of the Russian Federation as a state, the country had to go through several financial crises and even default. Black Tuesday 1994 is the most famous example, but it was preceded by several other collapses of the national currency. The first time the collapse of the ruble happened at the dawn of the formation of the state in 1992. At that time, the state had an incredibly difficult economic situation, which contributed to such a sad experience for Russia and all its inhabitants. In general, experts identify the following negative periods:
- September 26, 1992. The ruble lost 35.5 units (initial cost - 205.5 rubles).
- January 26, 1993. A new “black Tuesday” occurred four months later and entailed a reduction in the country's national currency by 75 rubles (as much as 15%).
- The new crisis did not allow the country to come to its senses - on February 2 of the same year, the rate of vouchers fell, many experts found it beneficial for some people in the state apparatus. There is an opinion that at that time the collapse occurred with an easy presentation of interested persons.
- October 11, 1994. A country suffering from unemployment, poverty and a catastrophically low standard of living, survived that very infamous black Tuesday.
- The next state collapse was waiting for 4 years. It was in the summer of 1998 that foreign currency went up by 10%.
- After 10 years, September 16, 2008, a protracted global crisis affected Russia. He began to revive the economy and the banking system thoroughly tested for strength.
- The latest, but no less important, is the collapse of the ruble in 2014 (December 16). Its effects are felt now. The authorities fail to return the course to previous indicators, despite forecasts and promises.
The black day of the calendar - the collapse or the beginning of a new life?
Western media dubbed Black Friday October 25, 1929. This event marked the beginning of the Great Depression in the United States. Incredible in depth crisis in America not only caused the ruin or poverty of some segments of the population, but also caused severe stagnation in the country's economy. People were virtually left with nothing, unemployment and hunger provoked massive suicides and increased crime.
But at the same time, the authorities were forced to take action, were able to overcome the protracted and deep crisis and lead the country out of the impasse. Many believe that without the sad events of those years, the United States could not have achieved the results that made the country one of the leaders in the world in terms of living standards and welfare of citizens.
What happened on October 11th?
Black Tuesday 1994 is considered one of the most significant and significant events in the history of the financial system of Russia. On that day, October 11, 1994, ruble quotes crashed sharply at interbank trading. The unstable and constantly cheapening national currency in one day just collapsed. The exchange rate of the ruble against the dollar has changed from 3, 081 to 3, 926 rubles.
It is noteworthy that this event occurred suddenly. And just as unexpectedly, the situation stabilized, and the ruble itself even strengthened by several positions compared to that unfortunate Tuesday. Often in the event of such disasters, the authorities react rather weakly, officials rarely have to bear personal responsibility for what happened. But the fact that the black Tuesday of 1994 was largely the result of the negligence and inaction of some statesmen, forced the government to take drastic measures.
The chairs then staggered under many: the head of the Central Bank of the Russian Federation Viktor Gerashchenko and the then head of the Ministry of Finance Sergey Dubinin lost their posts. This gesture on the part of the government of the country was, rather, demonstrative and indicative, and also served as a means of calming the emerging passions in society.
The opinion of experts
According to the official report, which was presented by specialized experts from the field of economics and finance, the reason that the ruble exchange rate against the dollar underwent such dramatic changes, and far from for the better, was the incompetent and uncoordinated actions of officials. Many at that time were confident that the situation had been planned and put in place by interested parties. To some extent, this theory is confirmed by the fact that it was very quickly stabilized. However, the consequences of the collapse were also not quickly overcome, alas.
Panic in society
First of all, 1994 in Russia, of course, was remembered as a black Tuesday, but it also became a momentous and crucial moment when the government managed to slow down inflation thanks to an agreement between representatives of several major sectors of the country's economy: metallurgical, coal, and oil production. In addition, industry has frozen prices for its products.
After the events of October 11, wholesale and retail chains significantly raised the price of goods. And although the rate quickly returned to its previous levels, the cost of basic foodstuffs, clothes, and other popular goods did not drop to the previous level. Another concern in society was the limitation of foreign exchange transactions and increased control over the circulation of foreign funds throughout the country, which led to increased currency speculation.
The collapse of the banking system
The birth of the institution of the banking system in the nineties was only just beginning. There were few large financial institutions with solid assets. What can we say about banks in which large reserves of foreign currency were created. For several days of the fall in the value of the national currency, people have finally lost confidence in it. And the reason for this was precisely black Tuesday. The dollar has since been considered the main means of storing personal savings with many citizens.
In such troubled periods, when the exchange rate is unstable, the population seeks to redeem as much foreign currency as possible, which happened in 1994. This did not lead to direct and immediate consequences, but had a prolonged effect. Having exhausted their reserves, many banks were unable to pay interest on time to depositors and repay loans to private individuals on time. Some of them even went bankrupt.
In what currency should savings be stored?
Since the 90s, the population has become accustomed to trust foreign currencies more. In recent years, the ruble has remained fairly stable. Nothing foreshadowed dramatic changes in the economy and financial sphere, but since the end of 2014, the ruble has again hit all the anti-records. In a short period (a little over a year and a half), he lost more than half of his value. In the light of such events, many are wondering about how to preserve their savings and not be left with nothing.
Experienced financial brokers agree that in this world there is nothing absolutely stable and reliable. The foreign exchange rate is primarily concerned. They advise against storing all funds in one currency. It is best to purchase a variety, but from the list of the most stable and promising. This will help, if not to increase wealth, then at least preserve it.
