Investments: the currency of choice

Over the last year, the weighted average deposit rates for retail investors in Russia have substantially decreased from 5.89% to 4.90% and taking into account further slowdown of inflation, they might go even lower in the upcoming years. Under such a drastic decline of deposit rates and the US sanctions policy against Russia remaining quite unpredictable, many Russian investors are currently feeling highly unsettled about the future of the national currency. Meanwhile, global concerns associated with the ongoing trade war between the US and China and negative interest rates in Europe, along with fears of a forthcoming recession, raise more questions than answers: what is the best currency to invest in?
The purpose of this research is to establish a framework for currency composition of a portfolio, given investors’ specific circumstances, goals, and prevailing macroeconomic environment. The research is mainly aimed at Russian high-net-worth and sub-high-net- worth individuals who are willing to manage currency exposure in their portfolio over a mid- term horizon from 1 to 3 years.