Is it profitable to invest in September when the hryvnia falls? What is the profitability of these deposits?

Is it profitable to invest in September when the hryvnia falls? What is the profitability of these deposits?

A lot of people are trying to save with deposits. It is enough just to put any amount in the bank, choose a term and wait for interest. Is it profitable to invest in September 2020?

What is the situation with deposits in Ukraine?

The profitability of deposits continues to fall unfortunately. There are several reasons:

✅ The instability of the hryvnia against the dollar and euro

✅ Decrease in the deposit rate by almost half since the beginning of the year

The average rate on hryvnia deposits was approximately 14.16% when choosing tariffs from 6 to 12 months in January 2020. If we take into account the tax of 19.5% from the state and the fact that over the past 9 months the hryvnia has fallen against the dollar, a person who made a deposit in hryvnia in January did not earn money during this time, but lost money. It is the losses against the dollar, the losses against the euro will be large.

Why the income from hryvnia deposits fell so much?

The income from deposits depends on the discount rate of the National Bank of Ukraine. This figure is 6% now and it was twice as much at the beginning of the year.  Why has this figure decreased? The lower this figure, the cheaper loans for commercial banks and individuals will be.

The policy of reducing the discount rate of the National Bank was carried out by the former chairman Yakov Smoliy. Further reduction of the discount rate was planned in autumn. The current leadership has not given such promises yet. This policy will continue, but the question is how quickly it will be implemented.

What currency is it more profitable to invest in now?

The income from deposits became even lower in September. The most profitable in Ukraine are hryvnia deposits for a period of 12 months, and their average yield is 8%.

If we evaluate dollar deposits, then the most profitable are deposits with a term of more than a year. Their average yield is estimated at 1.75%. The yield is even lower on the euro – 1%.

It is important to understand that not only the hryvnia fell in relation to other currencies but also the dollar. The euro looks more confident in this case.

It is important to know what the exchange rate will be in the future to understand in what currency to make deposits. It is better to invest in dollars and euros if the hryvnia will continue to fall. It’s not about making money, but about not losing your savings due to the inflation.

If the hryvnia continues to grow or remains at its current level at least, it is better to invest the national currency to increase profitability. Most of the leading Ukrainian bankers are confident that in late September – early October, the hryvnia may weaken to a maximum of 28.2 per dollar. Such a course will be at the end of the year most likely.

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