Growth of euro (2014) in Russia

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

During the first few months of 2014, the ruble weakened against the world's leading currencies, including the euro. How will the single European currency behave relative to the Russian one in the future? Should we expect that the growth of the euro will continue? It all depends on many factors of an economic and political nature.

Regulator and corridor

What we see on the screens of exchange offices is the result of currency trading conducted with the participation of the Central Bank. The value of the displayed figures is a combination of the impact of a large number of financial mechanisms, including those used by global economic institutions, including the Central Bank. One of the instruments of influence of the main bank of Russia on the market is an acceptable currency corridor. If the ruble exchange rate is significantly underestimated or overestimated, then the Central Bank starts buying or selling money in order to keep the required values. Foreign exchange intervention is taking place to prevent the ruble from depreciating too much.

After its volume exceeds 350 million dollars, the corridor within its boundaries shifts up by 5 kopecks. Such actions of the Central Bank are a common thing for the economy, but in the first months of 2014 such movements were predominantly one-sided. Currency corridorshifted, signaling a steady weakening of the ruble. The figures are eloquent: in comparison with the values of the previous year, the exchange rate of the Russian "wooden" against the main world currencies fell by 10 percent. The forecast for the growth of the euro and the dollar seems obvious.

Growth factor

In recent years, the ruble, as a rule, moved up and down the currency scales in almost direct correlation with oil prices. Now, however, its rate depends on other macro indicators. First of all, it is economic growth as such. Even though the price of a barrel of oil is stable at $100 or more, Russia's GDP is growing extremely slowly. The forecast for 2014 is about 1.5 percent growth, below the global average.

Low rates will inevitably affect the ruble against the leading currencies. The growth of the euro in 2014 against the Russian banknote, thus, may still be about 10 percent. At the same time, the practical significance of the exchange rate of the ruble against the euro for ordinary Russian citizens, according to experts, is low: the price of most goods is expressed in national currency. In contrast, for example, from the 90s, when the price tags in a large number of stores were in “y. e. . There is a possibility that only imported goods will rise in price, but not more than by the same 10 percent.

Authorities remain optimistic

The state, represented by the Ministry of Finance, however, does not expect any problems from the marked depreciation of the ruble in the foreign exchange market in 2014. According to officials of this department, for seriousthere are no special economic grounds for fluctuations in the exchange rate, and its possible values, one way or another, will remain within the corridor established by the Central Bank. At the same time, the Ministry of Finance avoids talking about the prospects for a reverse trend: will there be a strengthening of the ruble instead of the growth of the euro and the dollar.

Some experts believe that the Russian foreign exchange market has gained stability in recent years. In this regard, since 2015, the Central Bank plans to abandon monitoring of the ruble exchange rate and switch to inflation targeting - adapting the economy to the planned indicators of consumer price growth. In fact, this means letting the national currency float freely, but given the positive trends of recent years, its strong fluctuations should not occur, according to the expectations of financiers.

Business is careful

In contrast to the mood prevailing in state institutions, private corporations, and especially banks, prefer not to be so optimistic. According to a number of experts who are not related to the structures of the Ministry of Finance, the weakening of the ruble is a systemic phenomenon. It started not just now, but a few months ago. Meanwhile, oil prices do not have a direct impact on the ruble exchange rate. The thing is different: the demand for the national currencies of developing countries is falling, and, conversely, there is an increase in the popularity of the dollar, the growth of the euro.

In Russia, by the way, the structure of most sectors of the economy allows us to attribute the country to the noted type. Thisthe trend is global and is associated with the global crisis, after which developing economies do not develop very actively. In addition, the situation is complicated by the fact that investors, as soon as the market begins to “jump”, immediately sell rubles on the stock exchange. The exchange rate of the national Russian currency, therefore, is influenced by the psychological factor. Investors traditionally consider the ruble unstable, and investing in it is risky.

But it's better to save in rubles

Despite the negative trends in the foreign exchange market, experts do not advise Russians to save in dollars and euros. The fact is that our banks still offer high rates on ruble deposits - about 10% per annum. With regard to foreign currencies, such values have not happened for a long time. If, for example, we assume that the ruble depreciates even by another 10%, then the depositor will not lose anything. In relation to current inflation rates, such a deposit will in any case prove to be a winning option for storing money.

Some percentage of the amount of savings will also be lost on conversion. However, this "mathematics" is not entirely fair if a person is going to go to live abroad or receives a salary that depends on the exchange rate of foreign currencies. Considering that the euro exchange rate will rise, 2014 looks quite attractive for saving money in this currency in order to move abroad.

It's up to the word of Europeans

If the exchange rate of the ruble largely depends on the policy of the national regulator - the Central Bank of Russia, then the growth of the euro, in turn,largely determined by the work of the European Central Bank. Now this financial institution prefers a relatively soft approach to market regulation and does not gravitate towards unusual methods of influencing the euro exchange rate. This policy is facilitated by some improvement in the economies of the Eurozone countries at the beginning of 2014. If this trend continues, then the rate of the single currency against other world banknotes will most likely grow.

Regarding the relative position of the euro and the ruble, the US dollar factor will play a role here. The exchange rate of the Russian currency directly depends on the other two, which are currently more globally significant. It is unlikely that the euro exchange rate against the dollar in 2014 will strongly deviate from the value of 1.4 points (the regulatory Central Bank will not allow stronger fluctuations). Therefore, if the American currency reaches, for example, 36 rubles, then the price of the European one will not exceed 50.

Forecasts

Some experts of the banking market expect the ruble to strengthen by the end of 2014, and therefore it is better for citizens not to get involved in the rush buying of dollars and euros. The reason for such obvious optimism lies in the policy of the Central Bank. The negative trend that has accumulated in 2013 should therefore change its direction in the middle of 2014. Among the predicted figures - 33 rubles per dollar, 43.5 - per euro. This is also due to macroeconomic factors: in the developed EU countries, an increase in the level of demand for goods produced in Russia is expected, as well as an increase in demand for oil. However, the question of whether there will be a pronounced rise in the euro,forecasts for 2014 are not affected.

There is also a version that in the current economic situation there is no need to devalue the ruble (as happened, for example, in 2008). Then there was a significant decline in GDP, unemployment rose sharply, and therefore the devaluation became a saving straw for many sectors of the Russian economy (especially for export-oriented ones). In addition, experts believe that at that time the Central Bank spent about $200 billion on devaluation, and today it would be better to use the available funds for other purposes.

Geopolitics

As you know, "money loves silence." Therefore, any trends in the global economy are tied to political events. Today, the central theme all over the world is the situation around Ukraine. If the tension in relations between Russia, Europe and the United States falls, then the rates of national currencies will roll back to the values of January-February. At the same time, even in this case, one should not expect a strong appreciation of the ruble against world currencies, since, in addition to the political factor, the influence of economic trends remains significant, the strengthening of the dollar and the growth of the euro are possible. The year 2014 can largely determine the main vectors of geopolitics for the near future.

The main thing is that the market moves

The most unpleasant situation on any currency exchange is stagnation. Movements in the market, whether it is the growth of the euro or the depreciation of the ruble, give signals to investors to do something, to make any decisions. However, according to experts, to buildlong-term forecasts regarding exchange rates are a thankless task. There is a very high probability of not guessing the direction, a lot depends on factors, the action of which is very difficult to predict. It is important that market participants also have access to reliable information about the processes taking place in the economy.