Black Tuesday. The collapse of the ruble against the dollar on October 11, 1994

Looking at the constant jumps in the ruble exchange rate relative to foreign currency, many citizens of the country forget that they already had to experience similar phenomena. Even countries with a stable economic environment have to face a crisis and weakening of the national currency. Most often this happens with states in which a strong financial system is not formed and there is no competent policy of the government to prevent a possible collapse of the currency and eliminate the consequences of such an event.

The latest trends of the world economy clearly demonstrate that Russia needs to radically change the vector of its economic activities. The prolonged currency crisis of the last year is much more serious for every resident of the country than the short-term collapse of the ruble exchange rate in 1994, which economists and the media called "black Tuesday." What happened then and how to avoid such problems in the future?

Is the dollar rate important?

The stability of the national currency to external macroeconomic factors, as well as the domestic political, economic situation in the country is an indicator of its maturity. Even penny at first glance, the discrepancies in the course can cause negative consequences for the country's budget, and what can we say about the colossal swings.

While small fluctuations in the foreign exchange market are noticed only by bankers and economists, the rapid growth and decline can not but take notice of ordinary citizens. And as practice shows, in such situations panic prevails among the population. Striving to sell cheaper foreign currency as soon as possible, or, conversely, to buy more scarce goods, people aggravate the situation even more. Black Tuesday in 1994 demonstrated a panic in the society. All rushed into exchange offices and banks, which threatened the very existence of the financial system of the country and forced the authorities to take extreme measures.

History of ruble collapse

For a short period of formation of the Russian Federation as a state, the country had to go through several financial crises and even default. The black Tuesday of 1994 is the most famous example, but it was preceded by several other falls of the national currency. The first time the collapse of the ruble happened at the dawn of the state in 1992. At that time, the country 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 value - 205.5 rubles).
• January 26, 1993. A new "black Tuesday" occurred four months later and led to a cheapening of 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 course of vouchers fell, many experts considered it beneficial for some people in the state apparatus. There is an opinion that at that time the collapse occurred with easy submission of interested persons.
• October 11, 1994. The country, suffering from unemployment, poverty and a catastrophically low standard of living, experienced the same infamous black Tuesday.
• The next collapse the state waited 4 years. It was in the summer of 1998 that foreign currency appreciated by 10%.
• Ten years later, on September 16, 2008, a protracted global crisis affected Russia. He began to revive the economy and the banking system thoroughly for strength.
• The last one at the moment, but no less important, is the collapse of the ruble in 2014 (December 16). Its consequences are felt now. The authorities are unable to return to the previous indicators, despite the forecasts and promises.

The black day of the calendar - the collapse or the beginning of a new life?

Western media dubbed the black Friday October 25, 1929. This event was the beginning of the Great Depression in the United States. Incredible in its depth, the crisis in America not only caused the ruin or poverty of some segments of the population, but also caused a strong stagnation in the country's economy. People actually remained with nothing, unemployment and hunger provoked mass suicides and increased crime.

But at the same time, the authorities were forced to act, they managed to overcome the protracted and deep crisis and bring the country out of the impasse. Many believe that without the sad events of those years, the United States would not be able to achieve the results that made the country one of the leaders in the world in terms of the standard of living and welfare of citizens.

What happened on October 11?

Black Tuesday of 1994 is considered one of the most significant and large-scale events in the history of the Russian financial system. On that day, October 11, 1994, the quotations of the ruble on interbank trades plummeted. Unstable and constantly cheaper national currency in one day just collapsed. The exchange rate of the ruble to the dollar has changed from 3,081 to 3,926 rubles.

It is noteworthy that this event happened suddenly. And just as unexpectedly the situation has stabilized, and the ruble itself has even strengthened by several positions in comparison with that ill-fated Tuesday. Often in the event of such disasters, the authorities react 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 inactivity of some state husbands forced the government to take drastic measures.

The chairs then staggered under many: their posts were deprived of the head of the Central Bank of Russia Viktor Gerashchenko and the then head of the Ministry of Finance Sergei Dubinin. This gesture on the part of the government of the country was rather demonstrative and indicative, and also served as a means of appeasing the maturing passions in society.

Opinion of specialists

According to the official report, which was presented by profile specialists from the sphere of economy and finance, the reason that the ruble exchange rate against the dollar suffered such drastic changes, and far from the best, there were incompetent and uncoordinated actions of officials. Many at that time were confident that the situation had been planned and put into effect by interested persons. To some extent this theory is confirmed by the fact that it was very quickly stabilized. However, the consequences of the collapse were also overcome quickly, alas, failed.

Panic in society

First of all, in 1994, of course, Russia was remembered on a black Tuesday, but it also became a landmark and turning point when the government managed to reduce inflation due to an agreement between representatives of several key sectors of the country's economy: metallurgical, coal, and oil. In addition, the industry froze the prices of its products.

After the events of October 11, wholesale and retail chains significantly raised prices for the goods. And although the rate quickly returned to previous indicators, the cost of basic food, clothing and other popular goods did not fall to the previous level. Another factor of concern in the society was the restriction of currency transactions and increased control over the turnover of foreign funds throughout the country, which led to increased currency speculation.

The collapse of the banking system

The emergence of the institution of the banking system in the nineties was only just beginning. Large financial institutions with solid assets were quite small. 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 just black Tuesday. The dollar has since been considered the main means for storing personal savings from many citizens.

In such troubled periods, when the exchange rate is unstable, the population seeks to buy out as much foreign currency as possible, which happened in 1994. This did not lead to direct and immediate consequences, but had a prolonged effect. Many banks, having exhausted their reserves, failed to pay off interest on time with depositors and repay loans in time to private individuals. Some of them even went bankrupt.

In which currency to keep the savings?

Since the 1990s, the population has become accustomed to trusting foreign currencies more. In recent years, the ruble exchange rate has remained fairly stable. Nothing foreshadowed major changes in the economy and the financial sector, but since the end of 2014, the ruble again beats all anti-records. In a short period (just over one and a half years), he lost more than half his value. In the light of such events, many are wondering how to save savings and not stay with a broken trough.

Experienced financial brokers agree that in this world there is nothing absolutely stable and reliable. The exchange rate of foreign currencies is particularly relevant. They advise not to keep all funds in one currency. It is best to buy different, but from the list of the most stable and promising. This will help if not to increase wealth, then at least keep it.

Are Russians insured against the consequences of the collapse of the ruble?

Unfortunately, black Tuesday in Russia is not that often, but with an enviable regularity. Constant collapses of the national currency have already firmly entered the historical chronicle of the country. And every time the population suffers most from this. Any weakening of the ruble's exchange rate affects exactly the welfare of citizens, while banks and officials manage to earn billions in foreign exchange transactions.

Last months the Central Bank shows confidence that the situation with the next fall of the ruble was stabilized, but the protests of currency borrowers, rising prices and substantial impoverishment of the least protected layers of the population do not confirm this optimistic point of view of officials.