When will the dollar fall? How to analyze the situation in the foreign exchange market and understand: the dollar will fall or rise?

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

The exchange rate of the US dollar against the ruble has been very unstable in recent years: after the crisis of 2008-2009. The American currency has fallen in value significantly. In 2013 and early 2014, it grew again. Market experts believe that the situation, as well as the answer to the question of whether the dollar will fall, is influenced by a whole range of factors, both economic and political.

Oil price

According to one of the points of view, the exchange rate of the dollar against the ruble in 2014 will vary greatly. The sharp growth of the US currency may be accompanied by a smooth recovery of the positions of the Russian banknote. The ruble exchange rate, according to experts, largely depends on oil prices. The higher it is, the weaker the dollar will be. If the price of oil falls, then the Russian government, in order to compensate for the drawdown in the budget, devalues the ruble in order to gain more from the export of "black gold".

At the same time, positive macroeconomic statistics coming from the US, as well as the gradual exit of the EU from a long recession, suggest that oil prices will remain at a fairly high level (about $100 per barrel). The exchange rate of the ruble, thereby, is reinforcedsustainability of Western economies. In 2014, if oil prices take a sharp downward course, the Russian currency will then fall in price against the US. If it is the other way around, then all that remains is to wait for the dollar to fall.

The ruble is not weak

There is a point of view that the Russian ruble, in general, is not a weak currency at all. According to the estimates of supporters of this thesis, the national banknote of our country in real terms has strengthened by 60% over the past 10 years. If, for example, citizens kept their savings in rubles all these years, then they definitely won. At the same time, such a strengthening of the Russian currency, as economists believe, will sooner or later be won back by the market. Despite the large volumes of fuel exports, the inflow of net money into the country (in the form of salaries, transfers) is low. The Russian economy, therefore, may experience problems from this, and the ruble, as a result, will return the "debt" of the past years to the dollar.

But still "wooden"

Some experts believe that the ruble is a currency in respect of which it is difficult to be sure: it is problematic to predict how the dollar will behave, whether the Russian banknote will fall or rise. Suffice it to recall the 90s, when the ruble could turn into a worthless "paper" at the most inopportune moment. Too many factors traditionally affect the rate of the Russian currency: these are oil prices, the policy of the Central Bank in relation to the banking system, the behavior of private CBs themselves.

Forecasts for 2014 do not rule out that the ruble is devaluing - largely because Russiaentered the WTO, as a result of which the share of imports may increase, while domestic production may decrease. There are figures: by the end of 2013, the euro exchange rate reached 45 rubles, although back in 2012 such an indicator was considered impossible. Therefore, it is impossible to exclude an increase in the exchange rate to 50 units of the Russian currency for a single European one. In turn, the US economy has shown signs of stabilization in recent years, and experts are more optimistic about the dollar.

No point in speculating

Despite the fact that market experts remain pessimistic about the ruble, no one particularly advises investing in the US currency as a form of savings. There is a version that the population is artificially frightened by custom-made articles by economists, as well as heating up various rumors and gossip with the sole purpose of provoking Russian citizens to buy as much American currency as possible. The real "masters" of banknotes are not speculators, but central banks. They are the ones who decide when the dollar falls and when it rises.

There is an interesting point of view: if the Russians can somehow influence our Central Bank, which is still working, rather, observing the interests of the oligarchs, and not the people, then the “bucks” may fall in price to 30 rubles by the end of 2014. Also, some experts emphasize that even if there is a sharp deterioration in the economic situation, the state has at its disposal the Reserve Fund, where about 5 trillion rubles are “stored”. This is enough to cover a very large budget deficit.

Optimistic outlook

According to the observation of the seriesexperts, in the course of currency trading in recent months, there were stages when the Central Bank of Russia did not conduct any currency interventions at all. The rate of the national banknote, thus, fell into the so-called "neutral corridor", when the Central Bank does not care if the dollar rises or falls. The cost of the “dual-currency basket” at that moment did not exceed the critical value for the Central Bank of 41 rubles. There are fundamental and speculative factors for the further behavior of the Russian currency against the dollar and the euro.

Regarding the first - there is a significant increase in the balance of Russia's foreign trade balance. This is largely due to the improvement in the financial situation of the Eurozone countries, which are the main economic partners of our country. The ECB predicts that the region's GDP could grow by 1.1% by the end of 2014. As a result, there may be an increase in demand for fuel resources from Russia, as well as an increase in their price. In addition, the weakening of the ruble against the dollar and the euro, which occurred in 2014, actually improved the trade balance of our country due to active import substitution. So it's not a fact that Russian business is sitting and waiting for the dollar to fall.

Numbers from the state

The Ministry of Economic Development of Russia predicts that the ruble (in real effective terms) will weaken by 7.4% in 2014 (while some time ago the calculation was for a 1.5% depreciation). This figure was announced at the highest ministerial level. In 2015, the Russian currency will be able, according to the Ministry of Economic Development, to strengthen by0.2%, in 2016 - by 1.1%, and a little more in 2017 - by 0.1%. The exchange rate of the ruble against the dollar in 2014, according to the department, in average annual terms will be 36.3 units (against 33.9 according to the previous calculation). In 2015, one "buck" is expected to cost 38.8 Russian banknotes, in 2016 almost the same - 38.7, in 2017, too, without any changes - 38.5.

The Ministry of Economic Development also believes that the average annual price of a barrel of Urals barrels will increase to $104, and in 2015-2016. drops to 100 US dollars. In 2017, "black gold", according to forecasts of the department, will fall in price to $98 per barrel. The government is probably not wondering when the dollar will fall in value.

Analyst numbers

According to the current forecasts of the investment bank UBS, the Russian economy will grow by only 1.5% in 2014 (against the figure of 2.5% in previous calculations), and by 2% in 2015 (previously expected 2.8%). As a result of a reassessment of the vision of the financial situation in our country, analysts of this credit institution expect that the "dual-currency" basket, which was mentioned above, will cost 44.2 rubles by the end of 2014 (before that, the indicator was 40.7 units of the Russian currency).

Regarding the relationship between the dollar and the euro, by the end of 2014, UBS analysts expect that 1 unit of the US currency will cost 1.25 European banknotes. This is roughly in line with forecasts for the ruble (37.6 per dollar toDecember 2014). In 2015, the euro against the “buck”, according to UBS, will fall in price to the level of 1.20. Analysts of the bank expect that the Russian Central Bank will not interfere in foreign exchange trading, but do not exclude that the monetary policy of the Central Bank will tighten. But in their forecasts there is almost no place for theses about the development of the economy of our country when the dollar falls.

Ukrainian factor

Russian experts do not disregard the situation in Ukraine and the behavior of the dollar against the national currency of the neighboring country - the hryvnia. The International Monetary Fund sees a reasonable exchange rate in the form of 10, 5-11 units of this banknote to the "buck". There is also a pessimistic scenario, in which the dollar may rise in price to 12-13 hryvnia. Among the reasons are the increase in gas prices for Ukraine, the deterioration of trade partnership with Russia, which could provoke a deficit in the country's balance of payments and lead to the devaluation of the hryvnia. The policy factor of the IMF itself is important.

If the fund issues a loan to Ukraine, the country's national currency against the dollar may strengthen. The tranche from the IMF can become a positive signal for investors from abroad and entrepreneurs. One of the other positive indicators is the intention of the leaders of Russia and the United States to help resolve the situation in the country through diplomacy. But the political game is too complex a process to know for sure if the dollar will fall in Ukraine.

Cautious forecasts

Experts note that it is not difficult to understand how the dollar will behave based on "tomorrow's rate" -due to the fact that the Central Bank of Russia publishes the exchange rate of the current day as the official one for tomorrow. It is much more difficult to make long-term forecasts and it is impossible to say unequivocally when the dollar or the euro will fall. The exchange rate of the American currency in relation to the Russian very much depends on two groups of factors. First, it is as such the strength of the ruble. It depends on the situation inside the Russian economy and political processes. Secondly, the exchange rate of the dollar against other world currencies (first of all, the euro), which is not easy to predict. Therefore, analysts do not advise market players to rely too much on long-term forecasts about the behavior of the American banknote.