How are Ukrainians saving?

Ukrainians appear uninterested in long-term financial instruments, such as accumulative insurance, non-governmental pensions and investment funds, and products investing in precious metals. As before, they consider it better to keep their money in deposits or to buy up hard foreign currency which they then stall away at home. This inconsolable conclusion can be drawn from the results of a survey conducted by X-Trade Brokers Ukraine.

The survey reveals that 57 percent of those polled consider the euro to be the most stable and reliable currency in the long term, while 19 percent prefer the dollar. By contrast, only 5 percent trust the hryvnia. At the same time, Ukrainians mostly keep their savings in US dollars and hryvnias (47 and 41 percent, respectively), with only 10 percent choosing euros.

A third of the respondents (33 percent) still retains trust in the national banking system and deposits their disposable income in a bank. Incidentally, when choosing a specific financial institution and the type of deposit, most of those polled take into account the gradually-falling interest rates. Half deposit their savings in hryvnias, 28 percent in dollars, and 14 percent in euros.

Moreover, the analysts at X-Trade Brokers Ukraine note that the money on natural persons’ hryvnia deposits increased by 1.1 percent in April, bringing it a total of 290.9 billion hryvnias. Convertible currency deposit savings rose by 11.2 percent, to 17.312 billion dollars. This market trend reflects the limited savings options, the agency concludes, for 27 percent of those polled do not have so much money; 13 percent invest in real estate, 5 percent in buying securities, 2 percent in metals, 2 percent in shared investment funds, and 1 percent in stock exchange biddings.

The company is convinced that the poll results expose the current trends on the national financial market. The populace places more trust in a foreign currencies than in the hryvnia. So it is small wonder that 17 percent of the Ukrainians prefer buying hard currency as a way to save their money from inflation. According to the National Bank of Ukraine, in April 2011 individuals bought 762.2 million dollars worth more foreign currency than they sold, whereas in March the difference was 1.104 billion dollars. Moreover, by buying foreign currency, Ukrainians protect their savings from exchange rate fluctuations. For instance, in April the hryvnia fell by 0.07 percent to 7.9654 hryvnias per US dollar, by 5.07 percent to 11.784013 hryvnias per euro, and by 3.46 percent to 2.8968 hryvnias per Russian ruble.

A further 17 percent of those polled invested in shares. The vast majority (84 percent) of these investors count on national banks of issue, and only 16 percent on foreign ones. X-Trade Brokers Ukraine claims that this shows a low level of public knowledge about the varieties and profitability of investments other than deposits and currency purchases. Yet Ukrainians remain rather highly interested in acquiring shares: 38 percent of respondents stated that they were prepared to invest in shares if they had the money and 14 percent would do so immediately. Most of those polled (54 percent) are interested in the shares of Ukrainian companies and 46 percent are considering the possibility of investing in foreign businesses.

“The poll results reflect the limited possibilities for the populace to invest their individual savings. Ukrainians prefer simple financial instruments. So it is small wonder that the preferred options are bank deposits and purchasing foreign-currency,” Volodymyr Oleksiuk, an X-Trade Brokers Ukraine analytical expert, concludes, “while in the West, where financial markets are more developed, there are more profitable, albeit risky, types of investment, such as purchases of shares, oil, gold, silver, coffee, wheat, and other raw materials, as well as of debt and bonds.”

According to the X-Trade Brokers Ukraine press service, a total of 1,592 respondents were polled. The company is sure that the margin of error does not exceed five percent.