Translated material
Pendulum of crisis
The dollar recovered its fall
Yesterday, the dollar recovered the decline that began last week, jumping by 40 kopecks to RUB 33.77. The success of the US currency can easily be explained by the fact that international investors are returning to safer assets amid increasing concerns about the prospects for the global economy. According to analysts, in the near future exchange rates will remain volatile amid the release of quarterly reports of American companies.The dollar rose yesterday by 40 kopecks, to 33.77 rubles, the euro fell by 16 kopecks, to 44.499 rubles.
However, the situation on the domestic money market still remains stable. The Central Bank has to purchase foreign currency to adjust the growth of the ruble exchange rate. According to the first deputy chairman of the Bank of Russia, Alexei Ulyukaev, since the beginning of April, the regulator has already purchased more than $2 billion. Moreover, purchases for March amounted to $4 billion, and for February, $1 billion.
On the global Forex market yesterday, the dollar was actively winning back lost ground. The exchange rate of the American currency rose to 1.317 from 1.327 dollars per euro in a few hours. This was facilitated by the anxious mood of investors ahead of the publication of quarterly reports of American companies.
The G20 decisions that inspired investors have not yet been implemented in practice. In addition, market participants were upset by the gloomy forecast of financier George Soros, who predicted a deepening of the global crisis. Most stock exchanges showed a decline yesterday; on the foreign exchange market, money flocked to safer assets - the dollar and the Japanese yen. The yen to euro rate rose to 131.25 from 133.3 per euro.
The single European currency was put under pressure by negative news from the eurozone. According to experts, export volumes in Germany will show a decline for the fifth month in a row. “Additional pressure on European currency rates was exerted by the revision of eurozone GDP data for the fourth quarter,” notes financial analyst at Forex Club Alexey Trifonov. “The quarterly rate of decline was adjusted to -1.6%.”
As the analyst notes, the closing of positions on riskier instruments was facilitated by the anticipation of the publication of financial statements of large American companies for the first quarter of 2009, which, as investors fear, may turn out to be worse than forecasts. In addition, the players were affected by the approaching long weekend due to the celebration of Easter according to the Catholic calendar. The correlation between sentiment in stock markets and the behavior of exchange rates is likely to continue, Mr. Trifonov believes.
“As financial results are released, investors need to reassess the reality of things to see if recent optimism can be justified. Caution during the release of reports may lead to the sale of shares and increased demand for the dollar and yen,” notes dealer Resona Bank Ltd. Shigeru Nakane.
“The main source of uncertainty in the coming period will be corporate reports of companies and macroeconomic statistics,” emphasizes Yulia Gapon, Deputy Head of the Analytical Department of the Infina Financial Center. -- Just in case, investors have already begun to reduce positions in risky assets. At the end of the week, an important report on the state of the US budget for March will be released. A deficit of $150 billion is expected, which could have a negative impact on the US dollar. Upcoming company reports will be a serious test for the expert community in terms of the accuracy of current forecast estimates. As we know, fear has big eyes, and, as has happened many times before, the market often tends to exaggerate risks, as well as underestimate them.”