Why Is The Dollar Exchange Rate - 65 Rubles - Alternative View

Why Is The Dollar Exchange Rate - 65 Rubles - Alternative View
Why Is The Dollar Exchange Rate - 65 Rubles - Alternative View

Video: Why Is The Dollar Exchange Rate - 65 Rubles - Alternative View

Video: Why Is The Dollar Exchange Rate - 65 Rubles - Alternative View
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In addition to all sorts of objective macroeconomic factors and the laws of the currency market, there is one more factor …

The United States plans to include Russia in the list of countries manipulating the domestic financial market for the sake of artificially lowering the national currency.

Now there are 12 countries on the list of currency manipulators. After the next revision, which is held every six months, it will be replenished with 8 more states, including the Russian Federation, sources familiar with the report of the US Treasury, which will soon be presented to Congress, told Bloomberg.

Russia meets two of the three criteria for a manipulator country.

The first is systematic interventions in the domestic foreign exchange market. The Ministry of Finance of the Russian Federation, we recall, began to conduct operations to buy foreign currency for additional oil and gas budget revenues in February 2017, when oil prices rose to $ 55 per barrel, and the dollar exchange rate confidently fixed below 60 rubles.

In the first year, the volume of transactions was relatively modest at $ 12 billion. However, since 2018, the intervention formula has been changed, and the purchase of foreign currency has become frantic: at the end of the year, 4.2 trillion rubles, or 20% of budget revenues, were allocated for this purpose, which allowed the Ministry of Finance to buy about 66 billion dollars.

The results were not long in coming. Although oil has risen in price by 27% since the beginning of the interventions (February 2017) (from $ 55 to $ 70 per barrel), the ruble not only did not strengthen, but also lost about 12% against the dollar, the rate of which increased from 58 to 65 rubles.

The second criterion of currency manipulation, which Russia falls under, is the current account surplus of the balance of payments.

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This indicator reflects the difference between the main foreign exchange flows to and from the country, and its sharp growth may indicate that the authorities in one way or another (for example, artificially devaluing the currency) restrict the ability of citizens and companies to buy imports.

The threshold used by the US Treasury is 2% of GDP. If the current account surplus exceeds this value, the country comes under investigation for possible manipulation.

For Russia, the surplus at the end of 2018 amounted to an unprecedented 7% of GDP and became a record in the world.

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Although the official position of the Ministry of Finance and the Central Bank is that the budget rule and the purchase of foreign currency do not affect the market, Russian officials, including ministers, have repeatedly blurted out and admitted that they artificially keep the ruble cheap.

“If we had not done what we did, then at a price of $ 80 per barrel, the ruble would have gone where it was before the crisis - 50 rubles per dollar and below it would have gone , - he said, in particular, at the SPIEF-2018 head of the Ministry of Economic Development Maxim Oreshkin, commenting on the budget rule.

A weak ruble is necessary to support exporters, he explained: "The government and the Central Bank have just built the policy in such a way that the oil price rises or the oil price falls, so that this does not interfere with exports and the conditions are stable."

The abolition of the budgetary rule amid rising oil prices will lead to an undesirable strengthening of the ruble, said the head of the Ministry of Finance Anton Siluanov, speaking in the Duma in July 2018.

“There will be $ 100 (per barrel) - the rate, remember, was a little over 30 rubles per dollar. Do we need such ratios, such fluctuations now? Probably not,”Siluanov told the deputies.