Forex markets do not stop breaking forecasts developed by analysts around the world. None of the experts is able to answer unambiguously to the question of what is happening with the dollar. The formation of the exchange rate for one of the dominant currency pairs - the euro / dollar - is so chaotic that not only long-term, but also short-term forecasts have lost all meaning. A huge number of important events, such as the risk of default of Italy and Spain, a drop in the ratings of America, confuse investors. It is difficult for them to determine which of the factors of the economy will have the strongest impact on the market. Stratification of events makes the reliability of forecasts almost unrealistic. However, against the background of events taking place in the world, some conclusions can be drawn.
How does America position itself?
America again ceased to be the engine of the economy and moved into the category of source of problems. At the same time, investors do not cease to be interested in the dollar and treasury bonds, which have recently dropped significantly in the rating. Despite the critical situation in America and its huge external debt, interest and demand for foreign currency is formed by the human factor. Any news and any event leads to chaos, panic occurs on the exchange, and the value of the dollar begins to rise in relation to each of the world's currencies. A significant role in this matter is played by the confident position of the United States in the oil market.
What is the ECB doing?
A few months ago, the European Central Bank practiced tightened monetary policy. Now there is a different turn of events, quantitative easing is being carried out . Given that the Fed is characterized by so soft policies, actions by the authorities lead to a sharp increase in the euro supply in relation to the dollar offer. This state of affairs to some extent explains why the dollar is growing. Such a policy is mechanical and has no fundamental connotation. Moreover, the experience of past years clearly shows a likely scenario for the development of further events. In the spring of 2011, with the deteriorating situation on the territory of peripheral countries and the policy of quantitative easing in America, when the liquidity was withdrawn from the ECB economy, there was an increase in the euro against the dollar. The lack of a clear orientation does not preclude the high probability of a weakening euro against the dollar.
What is happening with the economy?
To understand what is happening with the dollar and why it is so actively growing in relation to all the currencies of the world, you need to look at the economic situation in the world. Recently, 4 leading Central Banks of the world have made a statement that they are starting to pursue a policy of quantitative easing. The Bank of Switzerland began to reduce interest rates to zero, he began to intervene against the franc. The second ECB began active purchases of government bonds of Spain and Italy on the open market. The Bank of Japan began to actively sell yen in the open market. The Fed has made a statement that interest rates in the US at zero level will be held for another two years. As a result, another wave of quantitative easing was formed.
The main directions of solving problems and the growth of the dollar
The central banks of the leading countries of the world indirectly indicated by their actions that growth in the economy of the strongest states of the world will be practically absent in the near future. High probability of negative indicators. Structured issues related to high consumption and high debt have not yet been eliminated by governments. And therefore, naturally, a way out of the situation has not yet been found. Problems, by and large, can only be solved in two ways:
- Deflation method. Layoffs, defaults, an increase in the savings rate, tax increases, etc.
- Inflationary method. The release of money into the market (by printing it additionally) with the further depreciation of debts and expenses. This is one of the prerequisites that explains what is happening with the dollar.
World countries are actively using inflationary methods of solving problems. This leads to an increase in the number of euros, yen and dollars in circulation. At the same time, the number of assets, such as oil and food products, remained unchanged. Purely in the mechanical aspect, the cost of almost all goods in the world will increase, and the economy will be characterized by weak growth. Given the factor that the dollar is a reserve currency, it is obvious that it will grow. Considering the question of what is happening with the dollar, we can say that the current situation is nothing more than a reflection of the state of the world economy.
What led to the growth of the dollar in Russia: superficial reasons
A fairly large number of experts associate the growth of the dollar with an active drop in oil prices. The situation is clearly seen in the example of the ruble devaluation last year. If at the beginning of the year the dollar exchange rate corresponded to 35-37 rubles, today the exchange rate has already crossed the mark of 60 rubles. There are no stops or changes in the trend. In addition to the pricing policy in the oil markets, the growth of the dollar against the ruble was affected by the fall of the economies of both Russia and Ukraine, as well as the imposition of stringent sanctions against the Russian Federation by the West.
The influence of the human factor on the growth of the dollar
Investors completely refused to invest their savings in a state with precarious economic conditions. Adjustments were made and sanctions, which were discussed above. A great contribution to the formation of the situation was also made by domestic oligarchs, who, having assessed the situation in the country and in the world, promptly took their savings out of Russia. The remaining people, in an attempt to preserve their savings, began to buy up the currency, which provoked its active growth. Currency contraction, growing interest in it and some other factors allow us to answer the question of what is happening with the dollar.
The actions of the Central Bank - an inexplicable phenomenon
The pressure on the national currency of Russia increased sharply after the end of the OPEC meetings . The increase in oil production is not planned to be suppressed. For the ruble exchange rate, this scenario only promises a fall in the national currency. Expert forecasts remain disappointing, as the state regulator has almost completely relieved itself of responsibility for the ruble exchange rate. The national currency went free float. According to experts, such a format of action can bring the expected result, in particular, stabilization of the exchange rate, but only in those countries in which the bulk of imports are in the industrial sector and the economy is stable. The economy of Russia does not correspond to any of the above parameters, therefore, no reaction to the free exchange has occurred, rather, on the contrary, the situation has only worsened.
What did the sharp change in the exchange rate lead to?
Looking at the situation and paying attention to what happens when the dollar grows, we can say about the aggravation of problems among the population. The level of wages has declined, it has become harder to find a job, and representatives of small and medium-sized businesses are forced to curtail their activities. We will not ignore the inability of the state to fulfill its social obligations, the reduction of social assistance programs and the sharp rise in price of all goods and services. The devaluation does not cease, and the state does not take any active measures. When will the dollar collapse? When does the situation stabilize? None of the analysts can even say about this. Moreover, denomination is considered as the only direction for solving the situation.
What do analysts say?
To the urgent question of what is happening with the dollar, 2014 could not give an answer. The situation changed so quickly that it was difficult for experts to monitor it. In 2015, this trend continued. Moreover, none of the leading analysts even undertakes to make forecasts and shed light on the situation. You can focus only on conversations in government and in economic circles. Not taking into account the fact that people are horrified by what happens when the dollar rises, the following statements were made. Allegedly (we emphasize!) The Russian government is already preparing for the dollar at the level of 100 rubles or more. If earlier these figures seemed unrealistic, today they are considered as quite possible. As for the hryvnia, most experts are inclined to believe that the rate should stabilize at 20-25 hryvnia, given that trading on the interbank market is closed with indicators of 29 sales and 32 hryvnia purchase. There are forecasts that say that in the near future the exchange rate will reach 70-80 hryvnia per dollar. Unambiguously answer the question of what happens to the dollar, no one is taken, in fact, how to give a forecast of its movement. So far it remains only to wait and observe what is happening.
Who wins the course?
Studying the question of what happens if the dollar rises in price, it is worth saying that the situation is not completely negative. There is a category of people who receive income from a sharp increase in currency. This includes both brokers and traders. Manipulating on exchange rates, this category of people feels very well. Studying the dynamics of what is happening with the dollar, currency market experts not only do not experience material difficulties, like most of the population. They benefit from the situation, which allows them to successfully earn and prosper. On abnormal economic world phenomena can be quite successfully enriched.