Putin Effect: Why Currencies Of Russia's Neighbors Are Among Best Performers Vs Dollar This Year

Putin Effect: Why Currencies Of Russia's Neighbors Are Among Best Performers Vs Dollar This Year

The migration of Russians into neighboring countries following Vladimir Putin’s invasion of Ukraine has boosted the currencies of former Soviet republics to the top of global rankings this year.

What Happened: Georgia, Armenia and Tajikistan are among the best performers against the dollar following the arrival of tens of thousands of Russian citizens beginning in February, who brought the equivalent of billions of dollars in savings with them, according to a Bloomberg report.

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The advantage of these small countries from a Russian’s perspective is that no travel visas are required, Russian is widely spoken here, and there are no restrictions on moving savings to local banks, the report said.

As a result, Armenia’s dram rose over 22% against the dollar since the start of the year, the top gainer among currencies worldwide, according to data compiled by Bloomberg. Georgia’s lari and the Tajik somoni have appreciated by more than 16% and 10%, respectively.

GDP Growth: Money transfers have also surged during the period. For Tajikistan, money transfers rose at least 50% in the first half of the year, said Natalia Lavrova of BCS Financial Group, citing the balance-of-payment data, according to the report. That’s put the landlocked nation’s economy on track to expand 7% this year, compared with earlier predictions for 4-5%, she said.

The International Monetary Fund hiked Georgia’s full-year economic growth forecast to 10%. Meanwhile, Armenia’s central bank hiked its GDP growth forecast to 13% from 4.9% due to the influx of Russians, the report said citing local media reported.

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