Sharp jumps in the ruble exchange rate against the American and European currencies disorient the market and sow panic among the population. A possible rise in prices for goods scares Russians, so they began to massively buy real estate, cars and household appliances. But why is the dollar rising and what can we expect in the foreign exchange market in 2015?
Why is the dollar and the euro growing?
The dollar is primarily a reserve currency. Most global transactions are settled in US dollars. That is why, with the depreciation of the national currency and the growth of inflation, the demand for dollars increases, which inevitably leads to an increase in its value. However, the current situation in the foreign exchange market was caused not only by the increased demand for US currency and panic, but also by a number of other political and economic factors.
Reasons for the rise in the dollar
- The dollar is now rising in price not only in relation to the ruble, but also in relation to all world currencies. The main reason for this is a gradual decrease in the money supply (the less money, the more expensive it is). Also, the strengthening of the dollar is influenced by the decline in the unemployment rate in the United States.
- Decline in oil prices. A decrease in foreign exchange earnings from hydrocarbon exports leads to an increased demand for the US dollar within our country.
- Capital outflow from the Russian Federation, which is always observed during crisis periods. Foreign investors exchange rubles for foreign currency and withdraw funds abroad.
- The sanctions imposed by the EU countries and the United States against Russia have almost completely cut off domestic business from the external borrowing market.
Growth of the dollar and euro - what to expect for Russians
Traditionally, the rise in the exchange rate of the dollar and the euro causes concern among Russians, since over the past 20 years this has inevitably led to an increase in prices for everyday goods. However, today foreign currencies are depreciating much faster than products are becoming more expensive. This means that compared to the 90s, our economy has become much more stable. Much of what we consume, we have already learned to produce on our own. Of course, we are still buying something abroad, but today's dollar growth will give a good impetus for import substitution. Lovers of gourmet food will certainly spend more, but most of the population is not threatened with a twofold increase in spending. The negative consequences for all will be expensive holidays in foreign resorts.
However, the devaluation of the ruble also has positive aspects, in particular, an increase in demand for domestically produced goods, which in turn will create new jobs and make the Russian economy more resilient to the negative factors of the external economic system. In addition, a sharp collapse of the ruble is always followed by its strengthening. Of course, the exchange rate of the ruble against the dollar is unlikely to return to its previous indicators, but it is also not worth expecting the cost of 1 US dollar within 100 rubles.
