Since the end of August 2014, the dollar has gradually begun to gain momentum. At the same time, a decrease in the cost of oil was recorded. At that moment, no one knew what the growth of the dollar, which was perceived by the market as another pullback, would lead to. Unrest in society began to intensify when the price chart began to rapidly break through level after level. Such a phenomenon could be observed since the end of August. It takes place today. The dollar has grown catastrophically against all quoted currencies on the market. The formation of new peaks with the Dow Jones and S&P 500 indices could be considered a signal to the situation that has developed today. Many analysts have warned since the beginning of September that the US currency is preparing a surprise for fundamentalist traders.
How did the dollar affect the life of Russia?
The increase in the value of the American currency, which is considered the most liquid commodity in the world, has left its mark on the economy of every country in the world. The growth of the dollar in Russia was especially vivid. The situation was aggravated by a drop in oil prices. The excitement among citizens in connection with the collapse of the ruble was not supported by government agencies for a long time. The mistake of the government was that it relied on the self-regulating forces of the market. The growth of foreign currency, which over the past five months has been jerky, has led to a rapid rise in prices for foodstuffs and difficulties in the business sphere. However, this is only the tip of the iceberg. At the state level, the growth of the dollar has become a prerequisite for the outflow of capital from Russia, to reduce imports, to reduce GDP to 0.8%. Not only small and medium enterprises, but also large concerns, whose activities replenished the budget of Russia, were hit. The growth of the dollar, a drop in oil, ruble emissions and a decrease in gas prices led to an intensive withering of the Russian economy. At a crisis time, the CBR raised the interest rate, which forced the state to take several steps back in development.
What does the bank for international payments say about the dollar exchange rate?
The question of what the dollar exchange rate will lead to concerns not only the Russian Federation, but the whole world. The Bank for International Settlements is one of the first financial organizations in the world that began to sound the alarm in connection with the situation. According to representatives of BIS, the growth of the American currency can lead to a crisis in the economy in many countries of the world. The tendency to strengthen one of the world's major currencies invariably leads to a destabilization of the situation in all stock markets. Fears are primarily due to the fact that large corporations, on the basis of which the economies of the world are based, mainly operate on the basis of loans issued in dollar terms. The return of the borrowed amount will have to be done in the same currency, which at the actual exchange rate is very problematic, and sometimes impossible. A crisis similar to what happened in Russia can be overtaken by more countries.
Debentures
A stronger dollar is already automatically a harbinger of disaster for developing nations. To judge what the growth of the dollar will lead to becomes possible only after the currency reaches new historical highs.
As soon as the dollar begins to grow stronger, the governments of countries that are actively developing begin to intensively untie the American currency from their own, thereby completely depriving themselves of external financing and strengthening the reserves of Central banks. At the same time, enterprises of developing countries over the past few years have significantly increased the issuance of debt obligations, moreover, in the dollar equivalent. To date, borrowers have issued securities worth about $ 2.6 trillion (3/4 of the volume is denominated in dollars). Cross-border loans reached about $ 4 trillion. If the dominant international currency does not begin to decline, but continues its march, the debt burden of many companies in the world will simply become unbearable. The situation will worsen if interest rates in America reach their normal state. And all this is exactly what is going on. The quantitative easing policy has ended, and the United States has almost all the trump cards in its hands.
The rising dollar: good for the US - bad for the economies of other countries
While the dollar continues to grow, and the US economy is booming, things are not going well in other countries around the world. For example, a recession reigns in Japan. Many EU countries are close to the crisis. It is on their territory that the ECB is trying hard to rehabilitate the situation by introducing many assistance programs. There were even statements from the government that a capital quantitative easing program was planned in the coming months. To make a forecast for the future so far not one analyst is taken. According to preliminary estimates, the situation will remain similar in the near future. The first changes can be noticed closer to spring, when the ECB will officially announce the improvement of economic indicators in connection with the work done.
No optimistic prospects
In the near future, one should not expect anything positive from the situation, especially if we take into account the continued growth of the dollar. The consequences are not limited to increased demand for foreign currency and its shortage in most countries of the world. One should expect an outflow of capital from the state budget. Large debtor companies will try to repay debts, again borrowing money at high interest rates. In an attempt to return the invested funds and get at least a minimum profit, they will introduce a policy of rising prices for all goods and services. Savings of commercial concerns will be carried out by reducing the rate of working personnel. People will become insolvent. It turns out a kind of vicious circle, from which the exit is not yet visible. What the growth of the dollar will lead to, no one dares to describe in detail, but the fact that the situation will affect everyone is a fact. First of all, states whose policies are aimed at active development will be under attack.
The return of the dollar at least a third of the path traveled is the most optimistic, but not feasible at this stage forecast.
