2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
What is the weighted average dollar exchange rate, and what impact does it have on the official quotes of the Russian currency against the US currency? In January 2015, the Central Bank of the Russian Federation changed the key rate from 17% to 15%. A significant part of the experts was surprised to accept such a decision. The fact is that most experts in the field of economics, analyzing the previous declarations of the heads of the department, came to the conclusion that the minimum interest rate will not be amended in the near future. Such a decision by the Central Bank led to a depreciation of the Russian currency against the US dollar.
USD exchange rate at the Central Bank of Russia
It is worth noting that the official ratio of Russian and American monetary units at that time was at a historical maximum and amounted to 69 rubles per 1 US dollar. In addition, stock quotes in this period sometimes reached the figure of 80 RUB/1 USD. At the same time, the exchange rate officially set by the Central Bank of Russia was significantly lower than the mentioned indicator. How is the official value of the ruble determined relative to other banknotes?
Method of determining exchange rates
The procedure for determining quotes of monetary units against the Russian ruble is governed by the provisions of Russian law. According to these documents, the function of establishing and announcing the official rates of foreign currencies is entrusted to the Central Bank of the Russian Federation.
The ratio between the US dollar and the Russian ruble is initially set. Official quotes of other foreign monetary units are accepted based on the already fixed value of one USD. In other words, the methodology for determining these rates involves using the ratio between currencies on international trading floors. For example, for the Central Bank to set the value of the euro against the ruble, the situation at the auction on the Moscow Stock Exchange is not assessed by these two monetary units. In this case, the weighted average exchange rate of the US dollar against the euro on international currency exchanges is taken. See the next section for more details on how this indicator is determined.
Weighted dollar exchange rate
In order to determine this currency parameter, it is necessary to take into account not only the cost of buying an asset, but also the volume of this transaction at a specific price. For clarity, let's take an example. Suppose we purchased 1 USD for 72 rubles and another one for 74 rubles. In this case, the weighted average dollar rate will be the arithmetic mean of these two values, namely 73 RUB. At the same time, if at the price of 74 rubles we buy two US dollars, andfor 72 rubles alone, then this indicator will be: (742+72)/3=73.33 rubles.
It should be noted that when determining the official quotes of the American currency relative to the Russian ruble, the average weighted dollar exchange rate of the Central Bank of the Russian Federation is also taken into account. At the same time, the financial regulator is not obliged to purchase this currency at such a price. In this context, it should be emphasized that the official exchange rate of the monetary unit plays the role of a kind of indicator. Along with this, you can buy American currency in commercial banks and private exchange offices at a price close to the weighted average dollar exchange rate.
It should be noted that even during the period of the so-called "currency panic", when the value of 1 USD for some transactions reached 80 rubles, the volume of such transactions was a small part of all trades per day. Consequently, the weighted average exchange rate of the US dollar was significantly below this mark, which, in turn, influenced the official exchange rate set by the Central Bank the next day.
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