The euro bounced back on the ruble

The dollar exchange rate on the world market dropped to a yearly low. The current weak positions of the American currency are connected with the expectations of the imminent completion of the Fed’s base rate increase cycle. On the Russian market, this is reflected not so much in the depreciation of the American currency, but in the growth of the euro, which confidently exceeded 90 rubles/€.

According to Investing.com, on April 13, the DXY index (the dollar exchange rate against the six leading currencies) fell to 100.85 points, the lowest level since April 21, 2022. This is 0.7% below Wednesday’s closing values. At the same time, the euro exchange rate for the first time since the end of March last year rose above the level of $1.1, adding 0.72% per day. Over the past five weeks, the dollar has lost 4-5% in value against the currencies of developed countries, and 1.5-1.7% over the past three days.

The depreciation of the US currency takes place against the backdrop of the publication of US macroeconomic data, which influenced the expectations of market participants for a further increase in the Fed rate.

The number of initial applications for unemployment benefits in the country for the week ended April 8 increased by 11,000 to 239,000. Analysts expected an increase in the indicator to only 232,000.

In turn, annual inflation in the United States in March amounted to 5%, which is 1 percentage point lower than in February, and became the lowest since May 2021. In such conditions, as Marina Nikishova, Chief Economist of Zenit Bank, notes, the market has strengthened expectations of the Fed’s rate hike in May by only 25 basis points, to 5-5.25%, and the completion of the current cycle of monetary policy tightening.

The weakening of its position in the global financial system against the backdrop of the formation of a multipolar model of the world order plays against the American currency, said Denis Popov, chief analyst at the PSB. The economic prerequisites for this were a steady decline in the share of the US economy on a global scale and an increase in the weight of developing countries. According to IMF estimates, the share of the US economy will decrease to 15% in 2023, while the share of China exceeds 19% and continues to grow. “The weight of the countries of Southeast Asia, as well as India, may exceed 45% of the world economy in the next decade,” Mr. Popov points out. Under these conditions, the use by the United States of the practice of economic and financial pressure only accelerates the process of abandoning the dollar in international settlements and in the formation of reserves, the expert notes.

Due to the isolation of the Russian market from the outside world, the global depreciation of the US currency has a limited impact on its exchange rate on the Moscow Exchange. Nevertheless, according to the results of exchange trading on Thursday, the dollar rate amounted to 81.4 rubles / $, which is 55 kopecks. below the closing values ​​of the environment. However, this is almost 6 rubles. above the values ​​of the beginning of March. At the same time, the euro exchange rate rose by 40 kopecks in a day, to 90.39 rubles / €, in five weeks the European currency rose by almost 10 rubles.

According to Natalia Vashchelyuk, chief analyst at Sovcombank, events in the global financial markets affect the Russian market mainly through changes in oil prices, which rose to this year’s highs, exceeding $85 per barrel.

The decline of the dollar in the Russian market may accelerate next week due to the approach of the tax period. According to Mrs. Vashchelyuk, after April 20, the supply of foreign currency from exporters will increase, which will positively affect the ruble exchange rate. Growing demand from imports and domestic investors will play against the ruble. Marina Nikishova does not rule out that on the eve of the May holidays consumer demand for foreign currency from the population may increase.

Vitaly Gaidaev