The printing failed: the United States dollar for the first time since the beginning of the month fell below 64 sublacerata link
On 17 October the dollar on the Moscow exchange for the first time in three weeks fell below 64 rubles. The Russian currency strengthened relative to the U.S., but only slightly weakens the Euro. Such a trend experts attribute to global appreciation of the Euro and depreciation of the dollar. European investors responded to the new deal bracito between the EU and Britain, and the us — to run the money printing press in the United States. In the coming months, the States plan to pump into the economy over $500 billion, which may further weaken the currency of the country. While support for the rouble will render the tax period and the reduction of tensions in trade wars, experts stress.
- © Maxim Shemetov/Reuters
Thursday, October 17, at the auction of the Moscow exchange, the Russian currency strengthened steadily against the us and slightly weaker to the European. The U.S. dollar fell 0.3% to of 63.86 of the ruble. In recent times the same value can be observed on September 24. The Euro thus rose by 0.19% to 71.1 per ruble.
The official exchange rates of the Central Bank on 18 October was 64,0144 rubles per dollar and 70,9023 of ruble per Euro.
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«The ruble is now a few factors. The main overall growth of market assets of developing countries. The dynamics changed dramatically after the US and China have made progress in trade negotiations. Thus, investors began to hope that in the foreseeable future at least a temporary compromise in the trade war between the two countries will be achieved», — explained in an interview with RT leading analyst of the Forex Optimum Ivan kapustyasky.
Following talks in October, China and the United States was able to partially agree on the terms of the bargain. As stated by Donald trump after meeting with Chinese representatives, the parties reached agreements in the sphere of intellectual property protection and the financial sector. In addition, Beijing also agreed to increase purchases of American agricultural products.
In addition to the success in trade negotiations, the US and China, support the ruble also have a high demand for Federal loan bonds (OFZ bonds) by foreign investors and the approaching tax period. At this time, traditionally exporting companies begin to sell foreign currency and buy rubles to pay taxes.
«The peak of the tax period will be in the 25-28 Oct. Corporations roughly sell about $25 billion in fact, the process of buying rubles has already begun. Moreover, additional demand for ruble also present-residents who seek to purchase BFL with still high yield. In particular, it says index of government bonds (RGBI), which is trading at historic highs — near 147,5 points,» added kapustyasky.
Interestingly, the ruble managed to significantly strengthen against the dollar, with declining oil prices. According to the exchange ICE in London, at the auction on 17 September the cost of raw materials of benchmark Brent crude dropped 0.5 percent to $59 per barrel. As experts explain, in recent months, investors in the Russian currency market have become less responsive to fluctuations in commodity prices.
«It is worth noting that the recent fluctuations in the oil market had no impact on the ruble, as they were temporary and did not lead to trend change. In recent years investors have become more cautious when comparing the dynamics of oil and the ruble,» — said in an interview with RT, the analyst of the debt market IK «Oriole Capital» Ilya Grigoriev.
A slight weakening of the ruble against the Euro comes on the backdrop of the global appreciation of the single European currency to the US dollar. In the course of trading on October 17, the corresponding rate increased by 0.5% and reached its highest level in two months — $1,11 per Euro.
Investors reacted positively to news of the deal between London and the EU bracito. As reported on 17 October, the President of the European Commission Jean-Claude Juncker, the parties were able to negotiate the terms of the Kingdom’s exit from the Union. Now the agreement must be approved by the European Council and Parliament of great Britain.
«When there’s a will, there is the deal — we have it! This is a fair and balanced agreement for the EU and the United Kingdom. It shows our commitment to finding solutions. I recommend the European Council to endorse this deal,» wrote Juncker in his Twitter.
Pressure on the dollar
The strengthening of the Russian currency to American analysts also associated with a significant weakening of the dollar on the world market. So, on September 30 of the corresponding index DXY was near three-year high, and reached to 99.7 points. Meanwhile, now the figure has dropped to the level of the end of August to 97.6 points.
One of the main reasons for the weakening of the dollar, experts consider actions of the fed. Over the past month, the fed is additionally printed and poured into the state’s economy approximately $185 billion. moreover, until the mid-2020, the regulator plans to pump into the financial system is still $510 billion.
The fed started to print new dollars after the recent liquidity crisis, when in mid-September, U.S. banks have faced a shortage of free money. The increase in the money supply in the financial system should help to credit institutions, but may increase inflation and put pressure on the dollar. Moreover, the actions of the Federal reserve increasing fears of investors about the imminent start of the recession in the United States.
«With the advent of information about a possible recession in the United States market players are only now able to assess the potential loss. The actions perpetrated by the Fed, allow you to delay the recession by increasing the money volume, but the outbreak of the economic slowdown cannot be eliminated by such actions,» — said in an interview with RT Deputy Chairman of the management Board of CB «LOKO-Bank» Andrey lyushin.
Assessment of Ivan Kapustyasky, in the near future, the Russian currency has a chance to further strengthen against the us. As the expert, the dollar could fall to 63.5 ruble and below. The short-term the Euro may rise to 72 rubles, and then will move to the mark of 70 rubles.