The fall in the ruble exchange rate (2014). The reason for the fall of the ruble

The Russian economy overcomes another round of difficulties, one of which is the weakening of the national currency against the dollar. What is the reason for the depreciation of the ruble? Is this a systemic phenomenon or a speculative effect? What will be the consequences for ordinary citizens and businesses?

Pessimistic forecast

According to some analysts, the value of the US dollar by the end of 2014 may grow to 37-40 rubles (or it will be the average annual rate of the American currency). The main reason for the weakening of the Russian banknote is the worsening of the indicators of the national economy. Experts who support such a pessimistic forecast also believe that the already low GDP dynamics will continue to decline, and capital will flow out of the country.

The ruble's positions, according to pessimistic analysts, will weaken not only against the dollar, but also to other major world currencies. There is also a point of view that in the Russian economy there is now a period of stable devaluation of the ruble due to the deterioration of the balance of payments. The deterioration in the positions of the Russian currency, according to analysts, can contribute to the policy of the Federal Reserve System, which in 2014 can continue reducing monetary measures on the economy, and in 2015 to begin raising the refinancing rate.

Traders' opinion

Professionals in the field of currency transactions believe that the position of the ruble relative to the dollar is not worse than that of other currencies. Market pressure, according to traders, also experienced the Australian dollar, the Argentine peso, as well as the national currency of Turkey - the lira. All of them, like the ruble, are so-called "raw" money. In late 2014, the dollar, according to trade experts, can cost 34-35 rubles, the euro - about 45-46 units of the Russian currency. During the year, however, there may be fluctuations in the exchange rate.

The main reason for the depreciation of the ruble, traders believe, is that in the global reorientation of investment flows, capital is withdrawn from emerging markets, to which Russia belongs, and invested in the economies of developed countries. This trend can remain relevant in the coming years. However, the weakening of the national currency of the Russian Federation, as financial experts believe, can be felt strongly by citizens: the probability of growth in consumer prices is high.

Opinion from the scientific environment

Some experts from among economists believe that the fall in the ruble exchange rate in 2014 will take a protracted character. As a result, the decision of the Central Bank to minimize the regulation of the foreign exchange market can be revised. However, as soon as the ruble's exchange rate stabilizes, the Central Bank may again loosen control over the trades. Much in the national monetary policy, experts believe, depends on the correct interpretation and understanding of economic growth. For example, scientists say that there is no reason to talk about the growth of the real economy on the example of developed countries, since there is too expensive labor.

Artificial growth due to accumulation of equity investments is, as some experts believe, a "soap bubble" that will eventually burst. However, for Russia, according to scientists, economic growth can be quite tangible, and it is the weakening of the currency - the real factor of its stimulation. When the ruble falls, exports increase, while investors increase their profits (although confidence in the market may also decrease).

Optimistic scenario

Despite the abundance of negative scenarios regarding the ruble / dollar exchange rate and its impact on the Russian economy, there is an optimistic view of the state of affairs among economists. There is a version that in 2014, from some of the crisis phenomena characteristic of the past, the eurozone, which is the main foreign trade partner of the Russian Federation, will get rid of. The economy of countries where the official currency is the euro in 2014 may grow by more than 1%.

This could lead to an increase in Russian exports of raw materials, as well as to an increase in the price of it. If this happens, the trade balance of the Russian Federation will grow, and after it the outflow of foreign capital will slow down. As a result, the ruble / dollar exchange rate will also be supported. According to such an optimistic scenario, Russia's GDP growth in 2014 may exceed 2.5%, and the dollar rate will not exceed 33 rubles. Thus, the forecast is given when the fall of the ruble will end: within the limits of 2014.

Retrospective

Among economists there is a point of view that the fall in the ruble's exchange rate relative to the leading world currencies is a completely new phenomenon and absolutely natural for the Russian economy. If you do not even take into account the crisis of 1998 , when the national currency of the Russian Federation fell to the dollar several times, it is enough to recall the recession of the economy in 2008-2009. Then the Russian currency underwent no less severe devaluation than in 2014. However, as further developments showed, the ruble in the next few years confidently won back the dollar and euro positions.

You can also recall currency trading in the fall of 2012 - then the rate was characterized by very high volatility, many experts predicted a rapid fall of the ruble, but this did not happen. Today, the Russian currency has fallen in price, but this, based on the experience of past years, may not give rise to making far-reaching conclusions on the further development of the national economy. In 2008-2009 in the economy there were specific reasons for the fall of the ruble. 2014 may reveal other factors affecting the exchange rate of the Russian currency.

Trends in Developing Countries

There is an opinion among economists that the ruble behaves in currency trading in much the same way as the banknotes of other developing countries, primarily the BRICS states (which include Brazil, India, the Russian Federation, the PRC and sometimes South Africa). The matter is that now there is a global outflow of investments of foreign investors from these economies. The national currencies are weakening, since there is a weighty reason for the fall - the ruble, real, yuan or rand is unimportant - a factor common to the countries of the whole group. Russia, thus, also loses its attractiveness to foreign capital.

The outflow of investments is also due to the fact that the US Federal Reserve is gradually tightening its monetary policy, cutting the release of unprovided dollars and increasing domestic rates on loans. Following the example of the world's leading economy, other developed countries "tighten their belts". Investors, seeing this trend, get a great deal of confidence in these markets and prefer to direct their capital there, rather than to developing countries. Economists also note that the currencies of the BRICS countries are not so much weaker as the dollar is strengthened by improving the state of the US market.

Internal causes of ruble weakening

The fall of the ruble, as some experts believe, is caused not by external but by internal causes. First, due to the active withdrawal of the Central Bank of Russia licenses from private banks - in 2013 this procedure was carried out in relation to 20 credit and financial organizations. The most resonant precedent is the closure of Master Bank, one of the largest in the country. Secondly, the Bank of Russia decided to gradually release the ruble into "free float".

The reason for this is the desire to stimulate the development of the country's industry, which is not easy to maintain profitability when exporting. A "weak" ruble could significantly reduce the price of Russian goods and make domestic production more competitive. Some economists believe that the depreciation of the national currency of the Russian Federation is beneficial to the authorities: loans on government bonds are taken in rubles, and oil revenues are calculated in dollars. With the growth of the dollar, the state will receive more national currency to pay interest on bonds.

Consequences of the weakening of the ruble

What threatens the depreciation of the ruble? Despite the fact that the weakening of the currency is, above all, a macroeconomic indicator, the consequences of this phenomenon can be felt by ordinary citizens. According to some experts, the fall in the rate of the Russian national currency may lead to an increase in the prices of imported goods (especially electronics, cars, drugs, clothing, and manufactured goods, raw materials for which are purchased abroad).

The rise in price in these segments, as calculated by analysts, can reach 15%. In addition, the cost of recreation for Russians abroad (especially in developed countries) will go up. Prices for air tickets and hotels are mostly expressed in dollars, and their nominal value, despite currency fluctuations, remains unchanged, which means that the actual amount of tourist spending when converting to the Russian currency increases. Citizens, therefore, can not be indifferent to such a phenomenon as the fall of the ruble. What will lead to further weakening of the national currency of the Russian Federation, economists explain quite intelligibly.

The Fed Factor

As noted above, there is a theory that the ruble / dollar rate is directly dependent on the policy of the US Federal Reserve System. Now this financial organization is reducing the so-called "softening" program, when the printing press produced unprovided dollars. The Fed reduces purchases of bonds and mortgage contracts. The new leadership of the Federal Reserve promises a flexible approach to working with this program. This financial organization has certain changes in its relationship with the authorities. If the Fed had to persuade Congress about the need to raise the ceiling of public debt years before, now it makes no sense - the US parliament has the right to change the ceiling at any time. This circumstance, economists believe, helps reduce the risks of the US economy from the actions of the Federal Reserve System. Thus, the US market has a good chance of stabilization and, as a result, the strengthening of the dollar in international currency trading.

Pros and cons of ruble weakening

The fall of the ruble is a phenomenon that does not always affect the economy negatively. There are pros and cons in this phenomenon. Among the indisputable advantages is an increase in the incomes of exporting companies and, as a result, an increase in tax payments to the Russian budget. Stimulated import substitution - the price of foreign goods increases, and it becomes more profitable to buy products of domestic production. This contributes to economic growth. In turn, to understand what threatens the depreciation of the ruble, it is worth remembering what is the country's foreign debt. This is money that residents borrow abroad - usually in dollars. Therefore, the main disadvantage of the weakening of the Russian currency is the growing burden on such borrowers. Russia's external debt now amounts to hundreds of billions of dollars (according to estimates of some experts, it has already exceeded the international reserves of the country). Long and significant weakening of the ruble becomes unprofitable for companies (and especially for commercial banks) that owe foreign creditors.

Forecasts of banks

The largest Russian and foreign banks are also trying to assess the fall of the ruble and predict further dynamics of the national currency of the Russian Federation. It is worth noting that credit institutions are generally optimistic. Banks like VTB Capital, Morgan Stanley, and Alfa-Bank expect that by the end of 2014 the dollar will cost 35 rubles. Citi, Otkrytie, Uralsib see the ruble as much stronger: in the publications of these institutions numbers between 32.3 and 34.5 units of the Russian currency appeared for the American bank note by the end of the year. The forecast of the ruble exchange rate from HSBC (35.4 per dollar), Renaissance (35.5) looks somewhat more pessimistic. The largest weakening of the Russian currency is seen by UBS (36.5). It should be noted that between the forecasts of banks relative to the ruble exchange rate to another major world currency - the euro - there is also a significant difference - from 43.4 (Morgan Stanley) to 48.4 units of Russian banknotes for euros (Citi).