| Expectations of high inflation in the US provoked the growth of the national currency During a week of almost continuous decline, the euro exchange rate crossed the $1.3 limit and dropped yesterday to 1.295. There is a dollar rally on world markets, started by the American Federal Reserve System (FRS). By raising the discount rate by the usual 0.25%, the Fed expressed concern about rising inflation in America. Inflationary fears may force the Fed to make sharper rate decisions, which means there is potential for the dollar to rise against the euro over the coming weeks. However, Russian analysts do not expect this growth to last long.
The dollar, after the collapse provoked by Asian central banks (see “Vremya Novostei” on March 1) , was practically stable. Since the middle of last week, the exchange rate of the American currency against the euro began to grow in anticipation of the Fed's decision on rates: from March 17 to March 23, it gained more than 2.7% from the euro. “One could expect that after the decision of the Federal Open Market Committee, the dollar would stabilize or partially lose its position,” says Uralsib FC economist Vladimir Tikhomirov. “However, this did not happen.” The fact is that, along with the change in rates, the Fed also changed its traditional commentary on the situation in the national economy, announcing increased “inflationary pressure.” Market participants saw an unambiguous hint in these words: in the future, we can see an increase in rates by 0.5%.
“Everyone is trying to buy dollars, high rates are the main motive,” said American trader Fortis (USA) Financial Markets Hugh Walsh after the euro “broke” the level of $1.3, “look at this growth in comparison with rates in Europe and Asia. The Fed will certainly not stop at raising rates." The US currency also gained weight against the Japanese yen amid disappointing production data in the Land of the Rising Sun. In the morning in New York, the dollar was already trading at 106.3 yen (an increase of 0.4% per day).
Meanwhile, the results of the EU summit held earlier this week are not in favor of the euro. At a meeting in Brussels, a decision was made to liberalize the Stability and Growth Pact - the largest economies of the eurozone, primarily Germany and France, will now be able to almost painlessly exceed the three percent level of budget deficit prescribed in the document (Germany, for example, has been exceeding this barrier for several years , now she has received a guarantee that multibillion-dollar fines for this violation of the pact will not be imposed on her). “Strict budget discipline, even in the weak EU economy against the backdrop of a huge deficit in the United States, was one of the factors strengthening the euro against the dollar,” recalls Mr. Tikhomirov.
The further fate of the dollar, as experts say, is in the hands of the Fed - the world is eagerly awaiting comments from American officials on inflation and other economic problems. “However, fundamental factors, such as the US foreign trade and budget deficit, are still unchanged,” recalls Yaroslav Lisovolik, chief economist at the United Financial Group. “I remain of the opinion that over the course of the year we will see renewed growth in the euro against the dollar.” According to him, the strengthening will also be facilitated by the diversification of the assets of the largest central banks in favor of the euro. “Asian countries have inherited a dollarized structure of international reserves, the potential for increased investment in euros remains,” he says.
“I think the market will soon stabilize at around 1.29-1.3 dollars/euro,” says Mr. Tikhomirov, “events on the Russian market will depend on this.” Yesterday in Russia, the euro fell to 36 rubles, and the dollar exchange rate in “tomorrow” calculations rose to 27.72 rubles. (the official exchange rate of the Central Bank was 27.697 rubles/dollars). This morning, trading may open with a new rise in the dollar - the domestic market is moving exactly behind the world market. Georgy STOLTS |
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