What determines the exchange rate? What determines the dollar / ruble rate?

Recent developments in our country have forced many citizens to think about what to do with their savings and how not to be in the red with a possible devaluation of the national currency. The ruble is weakening. To deny this is completely useless. But on what does the exchange rate depend? After all, there are so many decisive factors. And on what does the dollar exchange rate depend on the ruble? What is the relationship between these currencies?

The ruble as the national currency of Russia

It is difficult to understand what the exchange rate depends on, not knowing what exactly affects the rate of its national monetary unit. The ruble came to us from ancient times. But over time, the reasons for its strengthening and weakening have not changed at all. First of all, the trade balance affects the exchange rate. That is, the ratio of the number of imports produced relative to exports. This means that the more this ratio will tend to zero, the less preconditions will be for concern. After all, if, for example, exports significantly exceed imports, then this can lead to a lack of competition and a decline in the level of exports. And if the import takes leading positions, it can lead to a sharp decrease in the amount of foreign currency in the country, which will lead to a decrease in the value of the domestic monetary unit. What, in principle, can be observed today in Russia. In general, not only this leads the ruble to imbalance. There are many factors that can affect its growth or decline: geopolitics, inflation, GDP, unemployment, macroeconomic indicators of the country and other reasons.

The dollar as a world currency

After the Second World War was over, the US consolidated the title of superpower. In Europe, the US dollar poured in, this became the reason for its becoming a reserve currency. Today, the dollar has grown significantly. But it also has weaknesses: there are some factors that can affect its value. First of all, this, of course, is the demand for the dollar in other countries. But very important is how this monetary unit develops within its own country. After all, there are some factors that the US uses specifically to increase the exchange rate of the national currency. First of all, they include GDP growth, economic development, the balance of payments and the number of unemployed. Often, the banking system inside the country can affect the growth of the dollar. Interest rates and dividends can be controlled by applying special programs and activities. It is difficult to say what determines the exchange rate to a greater extent. Each factor plays its own separate role.

Why is the dollar higher than the ruble?

Russia is a very powerful state, but why is the dollar more expensive? And on what does the dollar exchange rate depend on the ruble? The ruble was not always cheaper than the dollar. But recently this trend has simply taken root in the territory of Russia. For several decades, the dollar has cost significantly more than the ruble. It is quite easy to explain such a law. Before the abolition of the gold standard, the value of each currency was confirmed by the gold reserve of its state. Money was different only in weight, shape, design and quality of metal. But after the standard was abolished, various factors began to exert pressure on each monetary unit. They later began to determine its value relative to other currencies. Gold is not enough for everyone, and it's a fact. Therefore, most countries try not to produce more money than goods produced in the country. This is done in order to avoid an economic crisis. From this follows the conclusion: the currency of the country that produces the most of all goods, and will occupy a leading position in the world. To date, this country is America.

Exchange Rates. Interest rates

What determines the exchange rate of the currency? In order to answer this question more fully, it is necessary to have knowledge in the field of financing. But if we speak in a simpler language, then this is the scheme. All states use interest rates to conduct their own monetary policy and control the exchange rate. As you know, the size of this interest rate is always influenced by several factors: the level of inflation, the policy of the government, the demand for a certain currency. Among the most influential factors are the following: relative interest rates, purchasing power parity, economic conditions, demand for capital and its supply. In aggregate all these reasons will form this or that cost of purchase and sale of each monetary unit. From What determines the level of the exchange rate? Perhaps, it is on how much all these factors will develop.

For what reasons is the course moving?

Why do exchange rates move? As already mentioned earlier, trade relations have a certain influence on each of them. Also, the exchange rate depends on exports and imports. With the growth of national incomes, the demand for imported goods also increases. This naturally leads the national currency to low positions. This factor was called "purchasing power parity". Another important factor that affects the direction of capital flow is speculation with currency. In most cases, this is due to the desire of investors to have more profitable trades, adding to the price of foreign currency. Consequently, such actions lead to the movement of capital from one country to another, which negatively affects the financial market. This phenomenon is called "capital flight". The consequences of this factor can be quite negative, for example, lead to a sharp jump in rates, and possibly to a real crisis. Why is the exchange rate moving? The long-term tendency of the movement of the courses is significantly influenced by various kinds of funds. After all, the main activity of these organizations is investing. If you take into account the amount that the funds have, it becomes clear how this investment can affect the exchange rate. For example, make him move in one direction for a long time. And of course, we can not fail to note the influence of the state on the exchange rate with the help of banks. And also the activities of importers and exporters.

Forex market

Recently, many began to resort to earnings with the help of the Forex market. And at the same time, the question of what the rates of exchange for "Forex" depends on more often began to arise. The most important engines of currencies in this market are two factors: export and import, as well as the activity of capital. Whatever you say, everything related to currency and its value depends solely on trade relations between countries. After all, the higher the value of goods produced in one's own country, the higher the currency. Well, about the activity of capital has already been sufficiently said above. It is very important to note that the "Forex" market is intended for people who just want to exchange one currency for another for its use. But to date, most of the participants in this market are speculators who profit from the movement of the stock price. At the same time, they can use even small fluctuations in their exchange rates for their speculations.

"Black gold" and currency fluctuations

What determines the exchange rate? As mentioned earlier, many factors play a role in the formation of the value of each monetary unit. But the most noticeable effect on the fluctuations of the rate is the cost of oil. This is especially reflected in the dollar equivalent. Recently, the US has significantly increased the amount of energy resources produced. In this regard , the OPEC countries have lowered the cost of oil from $ 100-120 (up to $ 50-60 per barrel). And this primarily had a negative impact on the state of the economy of many countries. Including Russia, which today is struggling with the problem of the fall of the national currency. Earlier, when oil consumption in the US was at a high level, and the "shale revolution" had not yet embraced the world, the dollar's exchange rate reacted negatively to rising oil prices. Today the situation has changed dramatically.

World currencies and the dollar exchange rate

The year 2014 turned out to be difficult for the financial market. And it affected not only Russia, but also a number of other countries. For example, by the end of the year the dollar against the euro strengthened by 11%. The yen is in an even more difficult situation, the level of strengthening the dollar was 12%. Of course, the result of Russia is difficult to equate to the losses of these countries, because the ruble rate fell by almost 45% per year! And the results of the virtual currency (bitcoin) have completely fallen to the bottom. Compared with November 2013, bitcoins have fallen in price against the dollar by as much as 72%. The minimum losses for this year were transferred to such currencies as the British pound, Indian rupee, Chinese yuan. This behavior of currencies, above all, is due precisely to the fall in prices for "black gold".

These unpredictable exchange rates!

The "Forex" market can often give novice clients useful information on how to predict currency rates. First of all, according to experts, it is necessary to monitor all events in the world of politics and economy. And also mandatory to carefully consider the forecasts of leading analysts for the near future. Of course, you can not completely rely on someone's opinion, but you still need to listen. In order to try to foresee the exchange rate for the near future, it is necessary to take into account the parity of interest rates, purchasing power parity and other nuances that are associated with the movement of exchange rates. Of course, not everyone is able to quickly learn all the subtleties of the financial market, but with a strong desire it is still possible!