Will the dollar fall? Dollar exchange rate: forecast

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

In an independent survey, it became quite clear that most people are worried about whether the dollar will fall. The interest of the inhabitants of Russia is primarily due to the fact that it is the exchange rate of the American currency that determines the cost of imports, and, consequently, the price of the vast majority of products. There is a very simple relationship. The high cost of black gold provides an influx of dollars into the domestic market, the ruble is actively strengthening, and the country's residents can purchase goods at an acceptable cost. If the price of oil falls, the picture becomes completely opposite, and the standard of living drops sharply.

2015 budget mismatch

Back in November 2014, it became quite obvious that the budget for 2015 was nowhere close to reality. The expenses were planned taking into account the fact that a barrel of black gold would cost at least $96 on the world market. Based on this indicator, the dollar exchange rate in banks during 2015 should not exceed 37 rubles. An unexpected surprise has already taken place inNovember 2014. By that time, the exchange rate of the American currency corresponded to 48 rubles. By mid-December of the same year, it rose to 60 rubles. The peak was reached at almost 68 rubles. During the pre-New Year crisis, world experts did not dare to talk about the depreciation. Forecasts were concentrated around the further growth of the currency. Some experts talked about reaching the mark of 100 rubles per dollar. Not only the fall in oil, but also other underlying factors have become prerequisites for a negative development of events.

What does the deficit situation say?

Experts, taking into account the budget deficit due to the reduction in foreign exchange inflows due to falling oil prices, talk about a possible, though not complete, recovery of the exchange rate. There are significant prerequisites for both the fall and the growth of the currency. Everything will depend on how the situation develops on the world oil market. So far, we can say that in the near future the dollar in Russia will fall a little, which is directly related to the rehabilitation of the cost of black gold. While the largest oil-producing countries restore their financial reserves after a massive drawdown, the dollar will decline. If today's rate corresponds to 54.5 rubles per dollar, then we can count on a decrease to 46-48 rubles. Superimposing the situation on the cost of oil, which is currently trading at $66.6 per barrel with a powerful uptrend, we can already say that the dollar will fall on the market. At the same time, an important meeting of OPEC member states will be held in June, atwhere decisions will be made that play an important role in pricing in the oil market and, consequently, influencing the dollar exchange rate in Russia.

Controversial political situation

In the world media, information has been repeatedly heard that after the annexation of Crimea and a parallel confrontation in the East with Ukraine, sanctions were applied against Russia. They radically hit many sectors of the economy and left a negative imprint on the financial situation in the country. Oil production and the military industry suffered the most, the revenues from which make up the bulk of the state budget and which supported the dollar in Russia at an optimal level. The main problem is the inability to take loans from Western financial institutions. The payment of payments on previously issued loans forces the government to actively buy dollars, which automatically leads to their appreciation.

What predictions can be made by analyzing Russian policy?

Answering the question of whether the dollar will fall, based on the political situation in the country, is very problematic. Western states not only do not cancel sanctions against Russia, but also tighten them in places. The impossibility of obtaining cheap foreign currency loans was supplemented by the mass exodus of foreign investors from the country, which was accompanied by an outflow of foreign currency. Corruption and severe pressure from the authorities on business have become the reason for the transfer of domestic business to offshore. All these facts indicate that the dollar exchange rate in banks in the nextperspective will not change drastically. Let's say it rolls back against the background of a slight increase in oil prices, but analysts do not recommend waiting for fundamental changes until the conflict with Ukraine, as well as with the countries of Europe and America is exhausted.

Forecast based on domestic government events

In addition to external factors, last year's pre-New Year's crisis was also initiated by internal state problems. Over the past 15 years, the country has not managed to change the raw-material model of the economy to a modern one. The oil industry practically devoured all free resources, and the distribution of funds between state economic segments was uneven. The overdevelopment of the oil industry caused the decline of other economic areas. As a result, we could see a very high dollar. A forecast regarding further appreciation of the American currency can be made based on the fact that at the moment no one is carrying out structural reforms. Without a radical restructuring of the economy, the situation will not change, and, consequently, the ruble exchange rate will remain insufficiently strong.

What makes forecasting difficult?

Expert opinions on the question of whether the dollar will fall, differ almost radically. No one gives confident guarantees of the future movement of the currency. If at the end of 2014 most experts confidently proved the ruble's hike to the mark of one hundred units per dollar, today the opinion has changed. Analysts tend tothat the dollar is falling and is confidently maintaining its trend. Difficulties in forecasting are caused by numerous speculative transactions with the American currency, which, in the conditions of its deficit in the country, cause sharp fluctuations. The dynamics of the dollar also depends on the payment of debt obligations by large Russian companies. For example, only in December of last year and in January of this year, about 32-33 billion dollars of debt was repaid. Buying foreign currency on the interbank market leads to fluctuations in quotes and excitement among the population in the absence of compensation from the Central Bank.

Central Bank policy may determine the dollar exchange rate

The decision of the Central Bank on injections into the international market influences a lot. Despite the fact that the Russian government allowed the national currency to float freely, it reserved the right to adjust the value of the ruble in extreme situations. Considering that Russia has one of the largest gold and foreign exchange reserves in the world, we can talk about the country's ability to hold back the national currency for exactly as long as necessary. The Central Bank can correct the dollar at any time. If, as part of monetary policy, the printing press is launched and unjustified money is issued, the US currency will skyrocket, which threatens to devalue the ruble. If the flow of unjustified money is still tightly controlled by the government, the prospect of strengthening the ruble and falling dollar can be considered.

Moderately optimistic forecasts

There are only three categories of predictions. It's moderately optimistic,optimistic and pessimistic. Considering each of the scenarios, we can talk about whether the dollar will fall. Moderate optimists hope for a powerful Russian economy and Europe's inability to develop without domestic energy sources. Analysts operate on the fact that low oil prices are unprofitable for the whole world, and soon the situation will stabilize both on the world oil market and in the Russian economy. They carefully study the dollar. Their forecast stops at a rate of 38-42 rubles by the end of 2015.

Optimistic views on the situation and the dollar exchange rate

Inveterate optimists also say that the dollar is falling. These are mainly representatives of the government apparatus and people close to them. They consider not the actual situation, but political motives. Their opinion rests on the fact that the fall in oil is the work of the American government and their partners. The goal of the opponent is military-political concessions from Russia. The senselessness of such a development of events in the future should become clear by the end of the summer of 2015. According to forecasts, the country will meet the new year 2016, being in a pre-crisis state. What is not taken into account is only the fact that due to the fall in the cost of black gold on the world market, America itself suffers, since shale oil is far from cheap to develop.

Pessimists are the majority of analysts and experts

The largest group of experts believes that the dollar, which the Central Bank offers today at the rate of 54.5, will never return to the pre-crisis level. Liberal-minded analysts point to the growth of the currency to the level of 100 rubles. They see the non-payment crisis, the credit crisis and the bankruptcy of a large number of banks and enterprises as the reasons for this. There are talks that Russia can turn towards a command economy and even form a renewed format of the USSR. The expectation of an incredibly deep crisis makes us beware of social upheavals and the parade of sovereignties.

Here it is worth taking a step back and testifying to the fact that not one of the serious forecasts made over the past six months has come true even half. This gives good reason to believe that it makes no sense to reliably, or even more likely, predict the direction of the dollar, since the direct connection between the currency and economic indicators has long been broken.