Recent events in our country have led many citizens to think about what to do with their savings and how not to be in the red with a possible devaluation of the national currency. The ruble is weakening. Denying this is completely useless. But what does the exchange rate depend on? There are so many decisive factors. And what does the dollar against the ruble depend on? What is the relationship between these currencies?
The ruble as the national currency of Russia
It is difficult to understand what the exchange rate depends on, not knowing what exactly affects the exchange rate of its national currency. The ruble came to us from ancient times. But over time, the reasons for its strengthening and weakening have not changed at all. First of all, the trade balance affects the exchange rate. That is, the ratio of the number of imports to exports. This means that the more this ratio tends to zero, the less preconditions there will be for concern. After all, if, for example, exports significantly exceed imports, then this can lead to a lack of competition and to a decrease in the level of export itself. And if import takes a leading position, this can lead to a sharp decrease in the amount of foreign currency in the country, which will lead to a decrease in the value of the domestic currency. Which, in principle, can be observed today in Russia. In general, not only does this lead to an imbalance in the ruble. There are many factors that can affect its growth or decline: geopolitics, inflation, GDP, unemployment, macroeconomic indicators of the country and other reasons.
Dollar as a world currency
After the Second World War was over, the United States secured the title of superpower. The American dollar poured into Europe, and this was the reason for its becoming the reserve status currency. Today, the dollar has risen significantly. But it also has weaknesses: there are some factors that can affect its value. First of all, this, of course, is the demand for the dollar in other countries. But it is also very important how this monetary unit develops within its own country. After all, there are some factors that the United States uses specifically to increase the national currency. First of all, these include GDP growth, economic development, balance of payments and the number of unemployed. Often, the domestic banking system can affect the growth of the dollar. Interest rates and dividends can be controlled using special programs and events. It is difficult to say what the exchange rate to a greater extent depends on. Each factor plays a separate role.
Why is the dollar above the ruble?
Russia is a very powerful state, but why is the dollar more expensive? And what does the dollar against the ruble depend on? The ruble was not always cheaper than the dollar. But recently, this trend has simply taken root in Russia. For several decades, the dollar has been worth significantly more than the ruble. Explain this pattern is quite simple. Before the abolition of the gold standard, the value of each currency was confirmed by the gold reserves of its state. Money, however, differed solely in weight, shape, design and metal quality. But after the abolition of the standard, various factors began to exert pressure on each currency. They later began to determine its value in relation to other currencies. Gold is not enough for everyone, and this is a fact. Therefore, most countries try not to issue more money than goods produced in the country. This is done in order to avoid an economic crisis. The conclusion follows from this: the currency of the country producing the most goods, and will occupy a leading position throughout the world. Today, this country is America.
Exchange Rates. Interest rates
What does the exchange rate of the currency depend on? In order to answer this question more fully, it is necessary to have knowledge in the field of financing. But speaking in simpler terms, then we get such a scheme. All states use interest rates to conduct their own monetary policies and control the exchange rate. As you know, several factors always influence the size of this interest rate: inflation rate, government policy, demand for a certain currency. Among the most influential factors, the following can be distinguished: relative interest rates, purchasing power parity, economic conditions, demand for capital and its offers. Together, all these reasons will form one or another purchase and sale value of each currency. From What determines the level of the exchange rate? Perhaps it is precisely on how all these factors will develop.
For what reasons is the course moving?
Why are exchange rates moving? As mentioned earlier, trade relations have a certain influence on each of them. Also, the exchange rate depends on exports and imports. With the growth of national income, the demand for imported goods also increases. This, of course, leads the national currency to low positions. This factor is called "purchasing power parity." Another important factor that affects the direction of capital flow is speculation with the currency. In most cases, this is due to the desire of investors to have more profitable deals, adding up the price of foreign currency. Therefore, such actions lead to the movement of capital from one country to another, which negatively affects the financial market. This phenomenon is called capital flight. The consequences of this factor can be quite negative, for example, lead to a sharp jump in rates, and possibly to a real crisis. Why is the exchange rate moving? Various types of funds significantly influence the long-term trend in the movement of rates. After all, the main activity of these organizations is investing. If we take into account the amounts possessed by the funds, it becomes clear how these investments can affect the exchange rate. For example, make him move in one direction for a long enough time. And of course, one cannot fail to note the influence of the state on the exchange rate with the help of banks. As well as the activities of importers and exporters.
Forex Market
Recently, many began to resort to making money with the help of the Forex market. And at the same time, more and more often the question arose about what the exchange rates on Forex depend on. The main drivers of currencies in this market are two factors: export and import, as well as capital activity. Whatever you say, everything related to the currency and its value depends solely on trade relations between countries. After all, the higher the cost of goods produced in your own country, the currency will be more expensive. Well, about the activity of capital has already been said enough. It is very important to note that the Forex market is intended for people who simply want to exchange one currency for another to use it. But today, most of the participants in this market are speculators who profit from the movement of the stock price. At the same time, they can use even small fluctuations in exchange rates for their speculations.
Black gold and currency fluctuations
What does the exchange rate depend on? As mentioned earlier, many factors play a role in the formation of the value of each currency. But the most noticeable effect on exchange rate fluctuations is the cost of oil. This is especially reflected in the dollar equivalent. Recently, the United States has significantly increased the amount of energy extracted. In this regard , the OPEC countries lowered the cost of oil from $ 100-120 (to $ 50-60 per barrel). And this primarily negatively affected the state of the economy of many countries. Including Russia, which today is struggling with the problem of the fall of the national currency. Previously, when oil consumption in the United States was at a high level, and the “shale revolution” had not yet swept the world, the dollar exchange rate reacted negatively to rising oil prices. Today the situation has changed dramatically.
World currencies and the dollar
The year 2014 turned out to be difficult for the financial market. And this affected not only Russia, but also a number of other countries. For example, by the end of the year, the dollar appreciated by 11% against the euro. The yen is in an even more difficult situation, the level of strengthening of the dollar was 12%. Of course, the result of Russia is difficult to equate to the losses of these countries, because the ruble exchange rate fell by almost 45% per year! And the results of the virtual currency (Bitcoin) have completely fallen to the bottom. Compared to November 2013, bitcoins fell by 72% against the dollar. Minimal losses for this year suffered such currencies as the British pound, Indian rupee, Chinese yuan. This behavior of currencies is primarily associated with a fall in prices for “black gold”.
These unpredictable exchange rates!
The Forex market can often give novice customers useful information on how to predict exchange rates. First of all, according to experts, it is necessary to monitor all developments in the world of politics and economics. And also, be sure to carefully consider the forecasts of leading analysts for the near future. Of course, you can in no case rely completely on someone’s opinion, but you still need to listen. In order to try to predict the exchange rate in the near future, it is necessary to take into account the parity of interest rates, purchasing power parity and other nuances that are associated with the movement of exchange rates. Of course, not everyone is able to quickly learn all the intricacies of the financial market, but with a great desire, this is still possible!