Palmistry 

Factors affecting the state of the exchange rate of the national currency. Factors of changes in exchange rates

To structural factors include changes in the level of interest rates, the country's balance of payments, inflation, gross national product.

Change in the level of interest rate on the exchange rate occurs in the following way. An upward change in the interest rate creates conditions for the inflow of foreign capital, since it is in this country that the allocation of resources becomes the most profitable and, conversely, when it decreases, capital outflows from the country.

country's balance of payments. The exchange rate is significantly influenced by the country's balance of payments, which reflects all foreign trade operations, as well as the movement of capital and loans. An excessive influx of short-term investments into the country adversely affects the exchange rate of the national currency, as it can lead to an excess money supply, which in turn leads to its depreciation and price growth.

In addition, excessive strengthening of the national currency in relation to others leads to a decrease in the competitiveness of domestic goods, as they become expensive for consumers in neighboring countries.

inflation rate. Inflation has an inversely proportional effect on the exchange rate. The higher its level in the country, the lower the exchange rate of the national currency and vice versa.

Gross national product . This indicator reflects the state of the economy and represents the sum of the costs of goods and services produced in the country during one year. An increase in the country's gross national product leads to an appreciation of the national currency and, conversely, its decrease leads to a decrease in the exchange rate.

to market factors include speculation in the foreign exchange market and the level of business activity in the country. The first factor is related to the actions of players in the foreign exchange market, who, on the basis of a decrease (increase) in the amplitude of exchange rate fluctuations, are trying to make a profit. Business booms and busts also have a significant impact on the exchange rate. So, for example, in the summer during the holiday season, business activity falls, and with it the demand for currency. At the same time before Christmas and New Year holidays there is an increase in business activity and the exchange rate.

political factors. They provide in most cases direct impact to the exchange rate. The depreciation of the exchange rate is influenced by such factors as the change of representative and executive authorities, the lack of a program for the executive to overcome the crisis and develop the country, disagreements between various branches of government and political forces in the country.

To psychological factors include the degree of confidence in the national currency, expectations of inflation, lack of economic thinking, etc. The level of economic literacy of the population predetermines the degree of correctness in making decisions on investing the national currency in a foreign one and vice versa.

Thus, the formation of the exchange rate is a multifactorial process, the level and fluctuations of which affect both the economic and social spheres.

In many countries, in order to support stability and development of the economy, along with market regulation of the exchange rate, methods of state regulation are used:

1. Currency intervention

2.Discount policy

3.Currency restrictions

  1. Functions and forms of international credit, the process of registration and stages of provision.

International credit- this is the provision of monetary and material resources of some countries to others for temporary use in the field of international relations on the terms of repayment, payment, urgency.

source for him are the means of the loan fund of the international market. Loan processing fixed in the loan agreement between the lender and the borrower.

International loans are divided by deadlines:

Short-term (up to 1 year);

Medium-term (from 1 to 10);

Long-term (from 10).

Depending on the forms:

1.commercial- serve international trade;

2.financial– for investing in objects, purchasing securities, repaying external debt, conducting intervention on the open market.

3. intermediate- to serve mixed forms of exports, capital, services.

By types:

Commodity - export of goods.

Currency - in the form of money.

By loan currency:

In the currency of the debtor's country.

In the currency of the country - the creditor.

In the currency of 3 countries.

In accounting currency units.

By ensuring:

1.secured (gold reserves, foreign exchange property of the state, securities).

2. not secured (blank)

1. branded - provided to exporters, foreign importers in the form of a deferred payment (from 2 to 7 years) for goods, can be issued by bills of exchange.

2. bank international credit - provided by banks on the security of commodity - material assets.

3.bank credit - an intermediate form between corporate and bank loans.

4. interstate loans - provided on the basis of intergovernmental agreements:

Bilateral government loan - the government of one country provides a loan to another country at the expense of budgetary funds.

Loans from international monetary and credit organizations (MBR, MBRD).

5. leasing - an agreement on the lease of movable and immovable property (from 3 to 15 years). The object is chosen by the lessee, and is acquired at the expense of the lessor, the leasing period is shorter than the physical wear and tear of the equipment (provided by special leasing organizations).

6.Factoring - buying a special financial company all monetary claims of the exporter to the foreign importer in the amount of up to 90% of the contract amount before the due date of payment.

7. Forfeiting - purchase by a bank, on pre-agreed terms, of a bill of exchange and other financial documents in connection with which the exporter transfers to the forfetor the commercial risks associated with the insolvency of the importer.

Functions are expressed by the peculiarities of the movement of loan capital:

1. Redistribution of loan capital between countries to expand reproduction and equalize national profits.

2. Economy of distribution costs in the field of international payments and their acceleration.

3. Regulation of the economy through the inflow of additional funds.

The procedure for issuing loans and guarantees is regulated IBRD Loan and Guarantee Agreement, which is between the bank and the government of a member country.

In the case of granting loans by a bank, it opens an account in the name of the borrower, while the loan amount is transferred to such an account only in the currency or currencies in which the loan was granted. The Bank authorizes the borrower to use the funds from the account only after covering the costs of the project as they are actually incurred.

The process of interaction between the borrower and the Bank is carried out in several stages:

I stage.Project identification. When identifying, the project is selected. The selection of projects and the proposals for their financing by the IBRD are mainly carried out by the governments of the borrowing countries. The selection is related to the priority of projects suitable for financing by the Bank, as well as the simultaneous interest in it of all Bank participants, the government and the borrower.

II stage.Definition, preparation and evaluation. Once a project has been selected and deemed technically feasible, it is refined based on an analysis of economic, financial and technical requirements and the likelihood of meeting them, as well as determining what factors and conditions will be necessary for the successful implementation of the project. The Bank, with the assistance of the borrower, evaluates the project in order to prepare the basis for making a decision regarding the allocation of a loan for this project.

To evaluate the project, a technical, institutional, economic, and financial analysis is carried out.

Technical analysis. The bank must be guaranteed that the project has the necessary design and technical study, technical base and meets the accepted standards. Estimates, commissioning schedules, logistics are being prepared.

Institutional analysis. And examines the qualifications of administrative staff, employees, the level of organization, the rules necessary for effective training and project implementation.

Economic analysis. By analyzing the costs and expected results for alternative project options, it is determined how much it contributes to the development goals of the industry, the country, what is the payback of the project, what is the distribution of benefits from its implementation and the impact on the budget.

The financial analysis. The purpose of this analysis is to develop measures to ensure sufficient financial resources to cover the costs of the project, both at the government level and at the level of individual enterprises participating in the project.

III stage.Negotiations and approval

After the appraisal of the project, formal negotiations are held with the borrower. They result in a legal agreement between the borrower and the Bank that clearly defines the project and sets out a program of action to achieve its objectives. Such agreements are special meaning for both parties, as they set out the basic principles and practices for spending funds.

After negotiations are completed, the management of the bank submits a report on the proposed loan for approval to the executive directors of the bank, then the loan documents are signed by the other parties, and the bank declares the loan effective.

IV stage.Project implementation and control

The Borrower is responsible for the implementation of the project and for providing the bank with data confirming that the project is being carried out properly in accordance with the stated objectives.

V stage.Grade

After the loan is closed and the project is completed, the results are evaluated. Evaluation is a key part of the Bank's efforts to improve the effectiveness of its development assistance, as about 40% of all projects are funded by other lenders and donors under various co-financing arrangements.

  1. International Monetary Fund, its institutions and main activities.
The International Monetary Fund is an international monetary and financial organization in the form specialized body United Nations. International Monetary Fund- an intergovernmental organization designed to regulate monetary and credit relations between member states and provide them with financial assistance in case of currency difficulties caused by the balance of payments deficit, by providing short- and medium-term loans in foreign currency. The IMF provides short- and medium-term loans with a deficit in the balance of payments of the state. The provision of loans is usually accompanied by a set of conditions and recommendations aimed at improving the situation. IMF Core Tasks: Promoting Development international trade and monetary and financial cooperation, maintaining the balance of payments of IMF members and regulating the exchange rates of their currencies, developing reforms to improve the monetary system of the world. The IMF provides credit resources to its members. The organization was established in 1944. The IMF was established at the UN International Monetary and Financial Conference (July 1 - 22, 1944) in Bretton Woods (USA, New Hampshire). The conference adopted the Articles of Agreement of the IMF, which serve as its charter. This document entered into force on December 27, 1945. The Fund began its practical activities in May 1946, having 59 member countries; he started foreign exchange transactions on March 1, 1947. The capital of the IMF is formed from the contributions of member countries in accordance with the quota established for each country, which is determined taking into account its economic potential and place in world trade. In addition to contributions from member countries in national currencies own funds The IMF includes SDRs and gold reserves. For temporary purposes, the IMF may use borrowed funds in the currencies of member countries with the consent of the latter. The headquarters of the IMF is located in Washington (USA). In addition, there are offices in Paris (France), Geneva (Switzerland), Tokyo (Japan) and at the UN in New York. At the IMF session held on April 27, 1992, it was decided to admit Russia and other countries CIS. The IMF is an international organization that unites 184 states (in 2003). Main Functions of the IMF. promotion of international cooperation in monetary policy, expansion of world trade, lending, stabilization of monetary exchange rates. The IMF helps countries develop their economies and implement individual economic projects through three main functions - lending, technical assistance and supervision. Objectives:. Promoting international cooperation in the monetary sphere; . Promoting the expansion, balanced growth of international trade and, accordingly, the growth of employment and the improvement of the economies of the member countries; . Ensuring the functioning of the international monetary system by harmonizing and coordinating monetary policy and maintaining exchange rates and currency convertibility member countries; ensure orderly relations in the monetary area between member countries; . Determination of parities and exchange rates; prevent competitive backing of currencies; . Assistance in the creation of a multilateral system of payments for current transactions between member countries and in the elimination of foreign exchange restrictions; . Assistance to member countries by providing loans and credits in foreign currency to settle balances of payments and stabilize exchange rates; . Reducing the duration and reducing the degree of imbalance in the international balance of payments of member countries; . Providing advisory assistance on financial and currency issues to member countries; .Exercising control over the observance by member countries of the code of conduct in international monetary relations. Higher governing body IMF - Board of Governors, in which each member country is represented by a governor and his deputy. Usually these are finance ministers or central bankers. The Council is responsible for deciding key issues activities of the Fund, such as amendments to the Articles of Agreement, admission and exclusion of member countries, determination and revision of the value of their shares in the capital, election of executive directors. The Governors meet in session, usually once a year, but may hold meetings and vote by mail at any time. The IMF has a "weighted" vote principle, which assumes that member countries' ability to influence the Fund's activities through voting is determined by their share in the capital of the IMF. Each state has -250 "base" votes, regardless of the amount of its contribution to capital, and an additional one vote for every 100 thousand SDRs of the amount of this contribution. This arrangement ensures a decisive majority of votes for the largest states. Decisions in the Board of Governors are usually taken by a simple majority (at least half) of the votes, and by important issues those of an operational or strategic nature - by a "special majority" (respectively 70 or 85% of the votes of the member countries). The largest number of votes in the IMF is (as of April 30, 1998): the USA - 17.78%; Germany - 5.53%; Japan - 5.53%; UK - 4.98%; France - 4.98%; Saudi Arabia- 3.45%; Italy - 3.09%; Russia - 2.90%. An essential role in the organizational structure of the IMF is played by International Monetary and Financial Committee. From 1974 until September 1999, its predecessor was the Interim Committee on the International Monetary System. It consists of 24 IMF governors, including from Russia, and meets in its sessions twice a year. This committee is an advisory body of the Board of Governors and does not have the power to make policy decisions. However, he does important features: directs the activities of the Executive Council; develops strategic decisions related to the functioning of the world monetary system and the activities of the IMF; Submits proposals to the Board of Governors to amend the Articles of Agreement of the IMF. A similar role is also played by the Development Committee - the Joint Ministerial Committee of the Boards of Governors of the WB and the Fund. The Board of Governors delegates many of its powers to the Executive Board, i.e., the Directorate, which is responsible for the conduct of the affairs of the IMF, which includes a wide range of political, operational and administrative matters, in particular, lending to member countries and overseeing their foreign exchange policies. courses. The Executive Board is permanently based at the Foundation's headquarters in Washington DC and usually meets three times a week. The IMF's Executive Board selects a Managing Director for a five-year term, traditionally from Europe, who can neither be a Managing Director nor an Executive Director. The Managing Director chairs the Directorate (without voting rights, except when the votes are equally divided) and heads the administrative apparatus of the fund. The functions of the Managing Director include conducting day-to-day affairs and appointing officials of the IMF: his deputy, secretary, treasurer, heads of departments , General Counsel of the Legal Department, Heads of Administrative Services and the Foundation's European Headquarters (in Paris). The interaction of the IMF with member countries is carried out through the regional departments: African, European I, European II, Middle East, Central Asia, South-East Asia and Pacific region. Organizational structure The apparatus of the IMF is constantly evolving due to the targets and functions of the IMF, which are determined by the transformation of the world economy and international monetary and financial relations. The purpose of lending. The IMF currently provides loans in foreign currency to member countries for two purposes: firstly, to cover balance of payments deficits, i.e., practically replenish the foreign exchange reserves of state financial bodies and central banks, and, secondly, to support macroeconomic stabilization and restructuring of the economy, which means - to finance the budget expenditures of governments.

Currently, there is no generally accepted method for determining the exchange rate. To a large extent, this is due to its multifactorial nature, in which there is a complex interweaving of factors and the promotion of one or the other or a whole group of factors as decisive. At the same time, the factors influencing the value of the exchange rate are divided into structural (acting in the long term) and market (causing short-term fluctuations in the exchange rate). Structural factors include the competitiveness of the country's goods on the world market and its change, the state of the balance of payments of the state, the purchasing power of the monetary unit and inflation rates, the difference in interest rates in different countries, state regulation of the exchange rate, the degree of openness of the economy. Market factors include the activity of foreign exchange markets, speculative foreign exchange transactions, forecasts, the cyclical nature of business activity in the country, crises, wars, natural disasters, etc.

AT general view the influence of some factors on the value of the exchange rate is as follows.

  • 1. Inflation rate and exchange rate. The higher the rate of inflation in a country, the lower the rate of its currency, unless other factors counteract. Inflationary depreciation of money in the country causes a decrease in their purchasing power and a tendency to fall in the exchange rate against the currencies of countries where the inflation rate is lower. This trend is usually seen in the medium and long term. The equalization of the exchange rate, bringing it into line with purchasing power parity, takes place on average within two years. The dependence of the exchange rate on the rate of inflation is especially high in countries with a large volume of international exchange of goods, services and capital.
  • 2. State of the balance of payments. The balance of payments directly affects the value of the exchange rate. An active balance of payments contributes to the appreciation of the national currency, as the demand for it from foreign debtors increases. A passive balance of payments generates a downward trend in the exchange rate of the national currency, as debtors sell it for foreign currency to pay off their external obligations. The size of the influence of the balance of payments on the exchange rate is determined by the degree of openness of the country's economy. Thus, the higher the share of exports in GNP (the higher the openness of the economy), the higher the elasticity of the exchange rate with respect to changes in the balance of payments. The instability of the balance of payments leads to an abrupt change in the demand for the respective currencies and their supply.

In addition, the exchange rate is affected economic policy regulatory states constituent parts balance of payments: current account and capital account. With an increase in the positive balance of the trade balance of age, the demand for the currency of a given country, which contributes to the appreciation, and with the appearance of a negative balance, the opposite process occurs. A change in the balance of capital movements causes a certain impact on the exchange rate of the national currency, which is similar in sign ("plus" or "minus") to the trade balance. However, there is also a negative impact of excessive inflow of short-term capital into the country on the exchange rate of its currency, since it can increase the excess money supply, which, in turn, can lead to an increase in prices and currency depreciation.

  • 3. National income and exchange rate. National income is an independent component that can change on its own. On the whole, however, the factors that force the imputation of national income have a large impact on the exchange rate. Thus, an increase in the supply of products increases the exchange rate, and an increase in domestic demand lowers its exchange rate. In the long run, a higher national income also means a higher value of a country's currency. The trend is reversed when considering the short-term time interval of the impact of increasing household income on the value of the exchange rate.
  • 4. The value of relative real interest rates and returns on securities. The influence of this factor on the exchange rate is explained by two main circumstances.

First, a change in interest rates in a country affects, other things being equal, the international movement of capital, primarily short-term capital. In principle, an increase in the interest rate stimulates the inflow of foreign capital, while its decrease encourages the outflow of capital, including national capital, abroad.

Second, interest rates affect the operations of the foreign exchange and capital markets. When conducting operations, banks take into account the difference in interest rates in the national and world capital markets in order to make profits. They prefer to get cheaper loans in the foreign capital market, where rates are lower, and to place foreign currency in the national credit market, if interest rates are lower there.

An important factor that determines for an investor the country of placement of capital is the amount of real interest rates (nominal rate minus the rate of price growth). The higher the real interest rates and, consequently, the yield on securities in the country relative to other countries, the more attractive this country for investing funds. An increase in demand for national financial assets is reflected in the supply of foreign currency and acts to increase the rate of national money.

  • 5. Activities of the foreign exchange markets and speculative foreign exchange transactions. If the exchange rate of a currency tends to fall, then firms and banks sell it in advance to more stable currencies, which worsens the position of a weakened currency. Currency markets quickly respond to changes in the economy and politics, to fluctuations in exchange rates. Thus, they expand the possibilities of currency speculation and the spontaneous movement of "hot" money.
  • 6. The degree of use of a certain currency in the European market and in international settlements. The fact that 60-70% of Eurobanks' operations are carried out in dollars determines the scale of supply and demand for this currency. Therefore, the degree of use in international settlements also affects the exchange rate. As a reserve currency, the dollar is inconvenient because it is subject to strong fluctuations and tends to fall in the long run. But there is no full-fledged, adequate replacement for him yet. This is evidenced by the following figures: the dollar accounts for 65% of the world's foreign exchange reserves, and the euro - only 25%.
  • 7. Speeding up or delaying international payments. In anticipation of a depreciation of the national currency, importers seek to speed up payments to counterparties in foreign currency so as not to incur losses when its exchange rate increases. When the national currency strengthens, on the contrary, their desire to delay payments in foreign currency prevails. This tactic, called "leads and lags," affects the balance of payments and the exchange rate.
  • 8. The degree of confidence in the currency in the national and markets. It is determined by the state of the economy and the political situation in the country, as well as by the factors discussed above that affect the exchange rate. Moreover, dealers take into account not only the given rates of economic growth, inflation, the level of purchasing power of the currency, but also the prospects for their dynamics. Sometimes even waiting for the publication of official data on the balance of trade and payments or the results of elections affects the balance of supply and demand and the exchange rate.
  • 9. Monetary policy. The ratio of market and state regulation of the exchange rate affects its dynamics. The formation of the exchange rate in the foreign exchange markets through the mechanism of supply and demand of currency is usually accompanied by sharp fluctuations in exchange rates. The market develops a real exchange rate - an indicator of the state of the economy, monetary circulation, finance, credit and the degree of confidence in a particular currency. State regulation of the exchange rate is aimed at its increase or decrease based on the monetary and economic policy. For this purpose, a certain monetary policy is being pursued.

Seasonal peaks and recessions of business activity in the country also have a significant impact on the national currency rate. Numerous examples testify to this. Thus, at the end of December 1996, the volume of trade on the Moscow Interbank Currency Exchange increased on each exchange day. The reason for the active purchase was the upcoming long break in trading on the foreign exchange market, associated with the New Year holidays.

Thus, the formation of the exchange rate is a complex multifactorial process, due to the relationship between the national and world economies and politics. Therefore, when forecasting and determining the exchange rate, the variety of rate-forming factors and their ambiguous influence on the ratio of currencies, depending on the specific situation, are taken into account.

The multifactor nature of the exchange rate reflects its relationship with other economic categories: cost, price, money, etc. Therefore, the exchange rate ratios of currencies, cleared of speculative and market factors, change in accordance with the law of value, with a change in the purchasing power of monetary units. This is manifested in the long-term dependence of the exchange rate on the rate of inflation, which develops unevenly across countries, also on the state of the balance of payments.

Changes in the exchange rate affect the redistribution between countries of that part of the total social product that is sold in foreign markets. The economic, social and political consequences of exchange rate fluctuations depend on the monetary and economic potential of the country, its export quota, positions in the world economic community. Therefore, the basis of the temporary exchange rate as the price of a monetary unit in foreign means of payment is formed by a whole range of exchange rate factors that manifest themselves primarily through the supply and demand of this currency in the money market. The resultant of these factors determines in each this moment specific exchange rate. However, real exchange rates are based on the purchasing power parity of currencies.

Information about exchange rates is constantly communicated to the public through mass media(press, radio, television, etc.).

Like any price, the exchange rate deviates from the cost basis - the purchasing power of currencies - under the influence of the supply and demand of the currency. The ratio of such supply and demand depends on a number of factors. The multifactor nature of the exchange rate reflects its connection with other economic categories - cost, price, money, interest, balance of payments, etc. Moreover, there is a complex interweaving of them and the nomination as decisive one or the other factors.

The factors influencing the value of the exchange rate are divided into structural (acting in the long term) and market factors (causing short-term fluctuations in the exchange rate).

To structural factors relate:

S competitiveness of the country's goods in the world market and its change;

S state of the country's balance of payments;

S purchasing power of monetary units and inflation rates;

S difference in interest rates in different countries;

S state regulation of the exchange rate;

S the degree of openness of the economy.

market factors associated with fluctuations in business activity in the country, the political situation, rumors and forecasts. These include:

S activity of the foreign exchange markets;

S speculative currency transactions;

S crises, wars, natural disasters;

S forecasts;

S business cycle in the country.

Let us consider in more detail the mechanism of influence of some factors on the value of the exchange rate.

National income and exchange rate. National income is not an independent component that can change on its own. However, in general, those factors that cause national income to change have a large impact on the exchange rate. Thus, an increase in the supply of products increases the exchange rate, and an increase in domestic demand lowers its exchange rate. In the long run a higher national income also means a higher value of the country's currency. The trend is reversed when considering short-term interval the time of impact of the increasing income of the population on the value of the exchange rate.

Gross national product (GNP) is a key indicator of the state of the economy and includes smaller economic indicators as components. There is a direct correlation between the change in the GNP indicator and the exchange rate.

GNP growth means a general good condition economy, increase industrial production, the influx of foreign investment in the economy, the growth of exports. The increase in foreign investment and exports leads to increased demand for the national currency from foreigners, which is reflected in the appreciation. GNP growth that has been going on for several years leads to an “overheating” of the economy, an increase in inflationary trends and, consequently, to the expectation of an increase in interest rates (as the main anti-inflationary measure), which also increases the demand for the currency.

Thus, in the short run, GNP growth contributes to an increase in the exchange rate, and in the long run, to its decrease.

Level of real interest rates determines the total return on investments in the country's economy (interest on bank deposits, return on investments in bonds, the level of average profit, etc.). Changes in interest rates and the exchange rate, on the one hand, are directly dependent - an increase in interest rates leads to a rise in the price of money and, accordingly, an increase in the exchange rate, on the other hand, an increase in interest on loans in the national currency reduces the demand for it and, accordingly, leads to a decrease in the exchange rate. course.

Unemployment rate (employment factor) can be considered in the form of two quantities: either as the unemployment rate (i.e., the percentage of the number of unemployed to total strength able-bodied population), or as an inverse indicator of the number of employees. The unemployment rate is usually published as a percentage. There is an inverse relationship between changes in the unemployment rate and the exchange rate - an increase in unemployment leads to a decrease in the exchange rate.

In accordance with modern economic theory zero unemployment cannot be achieved (there are always seasonal, structural, frictional unemployment). Therefore, the macroeconomic state of full employment for the industrial developed countries corresponds to an unemployment rate of approximately 6%.

The rate of inflation, or depreciation of the national currency, measured in terms of price growth. The level of inflation and changes in the exchange rate are inversely related - an increase in inflation leads to a decrease in the exchange rate.

The equalization of the exchange rate, bringing it into line with purchasing power parity, takes place on average within two years. The dependence of the exchange rate on the rate of inflation is especially high in countries with a large volume of international exchange of goods, services and capital.

Payment balance. The excess of payments from abroad over payments abroad constitutes a positive balance of payments and leads to an increase in the national currency. The excess of payments abroad over receipts into the country creates a deficit in the balance of payments (negative balance) and leads to a depreciation of the national currency.

The balance of payments can be reduced to the level of interest rates and the overall return on investment in the country's economy, which is the deeper cause of the changes taking place, while the movement of capital is a process that directly leads to medium-term changes in the exchange rate. For example, the depreciation of the dollar against major currencies (in particular, against the German mark) in 1994 was caused by a massive transfer investment funds funds from dollar investments in more attractive German and Japanese securities. On the contrary, in Russia last years The growth of the real exchange rate of the ruble against the US dollar was not the last thing caused by the massive inflow of capital from non-residents to invest in high-yield Russian government bonds.

Dynamics of changes in national production. Rapid economic growth raises fears that the country's inflation rate will rise. After a while, a "strong" economy can have the opposite effect on the exchange rate. Exchange rate in a stagnant economy is likely to fall. Economies that develop faster than the rest of the world tend to create budget deficits, trade balances, putting pressure on the currency at certain stages.

The activities of the foreign exchange markets and speculative foreign exchange transactions. If the exchange rate of a currency tends to fall, then firms and banks change it in advance to more stable currencies, which worsens the position of a weakened currency. Currency markets quickly respond to changes in the economy and politics, fluctuations in exchange rates. Thus, they expand the possibilities of currency speculation and the spontaneous movement of "hot" money.

The degree of use of a particular currency in the European market and in international settlements. For example, the fact that 60-70% of Eurobanks' operations are carried out in dollars determines the scale of supply and demand for this currency. The degree of its use in international settlements also affects the exchange rate.

Acceleration or delay of mee / international payments. In anticipation of a depreciation of the national currency, importers seek to speed up payments to counterparties in foreign currency so as not to incur losses when the exchange rate increases. When the national currency strengthens, on the contrary, their desire to delay payments in foreign currency prevails.

The degree of confidence in the currency in the national and world markets. It is determined by the state of the economy and the political situation in the country, as well as the factors discussed above that affect the exchange rate. Moreover, dealers take into account not only the given rates of economic growth, inflation, the level of purchasing power of the currency, but also the prospects for their dynamics. Sometimes even waiting for the publication of official data on the balance of trade and payments or the results of elections affects the balance of supply and demand and the exchange rate.

Currency policy. The ratio of market and state regulation of the exchange rate affects its dynamics. The formation of the exchange rate in the foreign exchange markets through the mechanism of supply and demand of currency is usually accompanied by sharp fluctuations in exchange rates. The market develops a real exchange rate - an indicator of the state of the economy, money circulation, finance, credit and the degree of confidence in a particular currency. State regulation of the exchange rate is aimed at its increase or decrease based on the monetary and economic policy. For this purpose, a certain monetary policy is being pursued.

Finally, a significant impact on the exchange rate of the national currency is also seasonal peaks and recessions of business activity in the country. Numerous examples testify to this. Thus, at the end of December 1996, the volume of trade on the Moscow Interbank Currency Exchange increased every exchange day. The reason for the active purchase was the upcoming long break in trading on the foreign exchange market, associated with the New Year holidays.

Thus, the formation of the exchange rate is a complex multifactorial process, due to the relationship between the national and world economies and politics. Therefore, when forecasting the exchange rate, the considered exchange rate factors and their ambiguous influence on the ratio of currencies depending on the specific situation are taken into account.

In this article, I want to tell what does the exchange rate depend on, and consider the main factors affecting the exchange rate. As you know, the exchange rate is one of the most important countries, and has a very importance for efficient. Therefore, any person who wants to put in order and secure personal finances should understand well what the exchange rate depends on,

To quickly predict its changes and apply them in practice in order to increase their own financial well-being.

Factors affecting the exchange rate.

1. State trade balance. That is, the ratio of export and import operations. When exporting goods and services, foreign exchange earnings enter the country, and when importing, on the contrary, foreign currency leaves the country. Therefore, if the trade balance is negative, it is biased towards imports (the country imports more than it exports), this always puts pressure on the national currency, its exchange rate decreases, since the country has a foreign currency deficit. And, conversely, when the trade balance is positive, biased towards exports (the country exports more than it imports), the national currency always appreciates, since the country has an abundance of foreign currency.

However, a positive trade balance is not always good, especially if its balance (the difference between exports and imports) is very large. An overvalued country's currency is just as bad as an undervalued one, and maybe even worse. Indeed, in this case, the cost of its goods grows, and they become uncompetitive in foreign markets. In such a situation, the Central Bank of the country takes actions aimed not at strengthening, but at reducing the exchange rate of the national currency. For example, 2-3 years ago it happened in Japan.

The trade balance is one of the key factors affecting the exchange rate. Ideally, a country's trade balance should be close to zero (that is, exports should be approximately equal to imports) - in this case, the exchange rate will be the most stable.

2. Macroeconomic indicators of the country. Such as inflation rate, unemployment rate, gross domestic product, etc. Each country calculates its most important indicators, but the main ones are always similar. All these data characterize their directions of development of the state economy and have an impact on the exchange rate. For example, high inflation and unemployment always have a negative impact on the exchange rate of the national currency, and production growth, on the contrary, supports and strengthens the national currency.

3. Policy of the Central Bank of the country. This factor is also one of the fundamental ones. Here we should consider several directions of actions carried out by the Central Banks of the states that provide strong influence to the exchange rate.

– Issue of money. In most cases, additional emission stimulates the depreciation of the national currency, because its money supply is growing, which means that the value of money is falling. But not always: so, let's say, the US Federal Reserve System practically "non-stop" prints new dollars, and they still continue to be the strongest world currency, since other monetary regulation instruments are correctly used there to curb dollar inflation.

– foreign exchange interventions. When the Central Bank needs to strengthen or weaken the national currency, it conducts, that is, it sells or buys large lots of foreign currency at a low or high rate on the interbank foreign exchange market of the country, thereby reducing or increasing its value. All this happens at the expense of the state's foreign exchange reserves, so the larger the country's foreign exchange reserves, the more opportunities the Central Bank has to regulate the exchange rate.

Foreign exchange interventions, as a rule, have a temporary effect. For a permanent strengthening or weakening of the exchange rate will require the influence of other factors.

– Discount rate. Another regulator of the Central Bank - or the refinancing rate - is the percentage at which the Central Bank can issue loans to commercial banks. The lower it is, the more accessible credit resources, the more loans are issued to the economy, the more goods and services are produced, and, therefore, the more stable the exchange rate of the national currency. Practice shows that countries with the lowest interest rates have the strongest currencies in the world.

– Operations with debt obligations. If the Central Bank wants to increase the exchange rate of the national currency, it issues and sells to legal and individuals their debt obligations (so-called bonds of the state internal loan or treasury bonds) - securities that provide a fixed income and the opportunity to earn on the growth of their value. Thus, he withdraws the money supply of the national currency, it becomes smaller, which means that its value increases. The yield of such bonds is directly dependent on how much money the Central Bank plans to raise, and their reliability is guaranteed by the state.

When it is necessary to reduce the exchange rate of the national currency, the Central Bank, on the contrary, begins to buy up its obligations, increasing their value, thereby increasing the money supply.

Many central bank policy instruments can affect the exchange rate, even if they are not actually applied, but are the so-called. "verbal", that is, voiced only in words. For example, the Central Bank declares that it plans to conduct a major foreign exchange intervention, traders in the markets, in anticipation of the strengthening of the national currency, begin to buy it, and the rate rises naturally, even without the actual implementation of this intervention.

4. Large investment projects and foreign trade contracts. Speaking about what the exchange rate depends on, it should be noted, so to speak, the future plans of the state, which are directly or indirectly related to the inflow or outflow of foreign currency. The implementation of such projects may have an impact on the trade balance, and this is the main factor affecting the exchange rate.

Implementation of major investment projects can plan both an outflow and an inflow of currency, large export contracts involve an inflow of foreign exchange earnings, and import contracts - its outflow. If this is planned (for example, contracts have already been approved and signed), further actions may affect the exchange rate.

5. Public confidence in the national currency. The extent to which the population trusts the currency of their country greatly affects the exchange rate. If people prefer, it means that there is always an increased demand for it, which will have a negative impact on the national currency. And this demand, if it exists, is very difficult to stop. Even if the Central Bank begins to apply its regulators, for example, limits the sale of foreign currency, imposes additional fees on these transactions, prohibits foreign currency deposits, etc., this often leads to the opposite effect: the black market of foreign currency begins to work, where it is sold even more expensive , panic begins among people, currency hype, which leads to sharp jumps in the exchange rate.

During a period of panic, a situation always arises when (even with large commissions) in order to maintain a currency position, which further spins the black market and inflates the exchange rate to unimaginable limits. Surely all of you periodically observe a similar situation.

By creating a rush demand for the currency, people themselves provoke its growth. The preferences of the population and panic moods are very important factors affecting the exchange rate. In some situations, they are even the only ones! (that is, there are no other serious prerequisites for the growth of the foreign exchange rate, but it is growing solely because of panic). As a result, this always leads to the same rapid fall in the exchange rate, and all those who bought the currency at the peak of the panic are at a loss. Therefore, always think carefully, and do not panic in the absence of other factors affecting the exchange rate!

6. currency speculation. It often happens that large participants in the interbank (or even global) foreign exchange market deliberately “swing” the exchange rate in order to obtain speculative earnings. Seeing such a case, the Central Bank may intervene in the process, imposing certain sanctions on these participants, but still such a situation is far from uncommon, and everyone who is involved has probably seen it more than once.

The so-called "currency swing" can have a very serious impact on the exchange rate, but it will be short-lived, so this situation can be used to earn money, but in no case to transfer your savings from one currency to another.

7. Force majeure circumstances. And, finally, speaking about the factors influencing the exchange rate, one cannot fail to mention force majeure circumstances. For example, military actions, serious protest movements, mass strikes, terrorist attacks, etc. also always have a serious impact on the exchange rate of the country in which it occurs. This impact can be both short-term, if the circumstance is quickly eliminated, and lingering, if it continues. long time, or led to irreversible consequences in the economy and the financial sector, requiring a long recovery.

For example, everyone probably remembers that when a major terrorist attack took place in the United States on September 11, 2001, the dollar exchange rate fell sharply around the world. However, this fall was short-lived.

I have only briefly listed the main factors affecting the exchange rate. Of course, you can consider each of them in more detail, but this information will already be enough to navigate the currency pricing and learn to correctly predict changes in the exchange rate, which will allow you to avoid mistakes and will find its positive reflection on the state of your personal finances.

That's all. The site strives to ensure that your financial literacy always meets the requirements of current realities. Stay with us and stay tuned for updates. See you soon!

The exchange rate is the value of the country's currency, expressed in payment terms of another state. It links economics to outside world, allows for international transactions. The ability of citizens of the country and non-residents to freely buy and sell banknotes is called convertibility.

Factors affecting the exchange rate .

Like any price, the exchange rate deviates from the cost basis - the purchasing power of currencies - influenced by the supply and demand of the currency. The ratio of such supply and demand depends on a number of factors. Among them are the following.

1. The rate of inflation. The ratio of currencies in terms of their purchasing power, reflecting the operation of the law of value, serves as a kind of axis of the exchange rate. Therefore, the rate of inflation affects the exchange rate. The higher the rate of inflation in a country, the lower the rate of its currency, unless other factors counteract. Inflationary depreciation of money in a country causes a decrease in purchasing power and a tendency for their exchange rate to fall against the currencies of countries where the inflation rate is lower. This trend is usually observed in the medium and long term.

2. State of the balance of payments. An active balance of payments contributes to the appreciation of the national currency, as the demand for it from foreign debtors increases. A passive balance of payments generates a downward trend in the exchange rate of the national currency, as debtors sell it for foreign currency to pay off their external obligations. The instability of the balance of payments leads to an abrupt change in the demand for the respective currencies and their supply. AT modern conditions the influence of international capital movements on the balance of payments and, consequently, on the exchange rate has increased.

3. Difference in interest rates in different countries. The influence of this factor on the exchange rate is explained by two main circumstances. First, a change in interest rates in a country affects, other things being equal, the international movement of capital, primarily short-term capital. In principle, an increase in the interest rate stimulates the inflow of foreign capital, while its decrease encourages the outflow of capital, including national capital, abroad.



4. The activities of the foreign exchange markets and speculative foreign exchange transactions. If the exchange rate of a currency tends to fall, then firms and banks sell it in advance to more stable currencies, which worsens the position of a weakened currency. Currency markets quickly respond to changes in the economy and politics, to fluctuations in exchange rates. Thus, they expand the possibilities of currency speculation and the spontaneous movement of "hot" money.

5. The degree of use of a certain currency in the European market and in international settlements. For example, the fact that 60% of Eurobank transactions are carried out in dollars determines the scale of supply and demand for this currency. The degree of its use in international settlements also affects the exchange rate. Thus, in the 1990s, the dollar accounted for 50% of international settlements, 70% of foreign debt, in particular, developing countries. Therefore, the periodic increase in world prices, the growing payments on the debts of states contribute to the appreciation of the dollar, even in the face of a decline in its purchasing power.

6. The exchange rate ratio of currencies is also affected acceleration or delay of international payments. In anticipation of a depreciation of the national currency, importers seek to speed up payments to counterparties in foreign currency so as not to incur losses when the exchange rate increases. When the national currency strengthens, on the contrary, their desire to delay payments in foreign currency prevails.

7. The degree of confidence in the currency in the national and world markets. It is determined by the state of the economy and the political situation in the country, as well as the factors discussed above that affect the exchange rate. Moreover, dealers take into account not only the given rates of economic growth, inflation, the level of purchasing power of the currency, the ratio of demand and supply of currency, but also the prospects for their dynamics.

8. Currency policy. The ratio of market and state regulation of the exchange rate affects its dynamics. The formation of the exchange rate in the foreign exchange markets through the mechanism of supply and demand of currency is usually accompanied by sharp fluctuations in exchange rates. The market develops a real exchange rate - an indicator of the state of the economy, money circulation, finance, credit and the degree of confidence in a particular currency. State regulation of the exchange rate is aimed at its increase or decrease based on the objectives of the monetary and economic policy. For this purpose, a certain monetary policy is being pursued.

Other factors affecting the exchange rate:

1. Publication of important economic data in the media: inflation rates, balance of payments deficit, unemployment rate, discount rates, stock indices, stock prices, bonds, GNP, election race, etc.

2. Large transactions of commercial financial organizations.

3. Exchange rate factors, the impact of which cannot be predicted (we are talking about wars, revolutions and other cataclysms).

4. The Central Bank can have a direct impact on the exchange rate by buying or lending currency in large quantities. This causes sharp fluctuations in the ratio.

5. Insurance, pension and other funds invest cash into currencies, trying to avoid the risks of devaluation. Such transactions - especially with large amounts - significantly affect the country's exchange rate.

6. The cost of gold and oil.

Thus, the formation of the exchange rate is a complex multifactorial process, due to the relationship between the national and world economies and politics. Therefore, when forecasting the exchange rate, the considered exchange rate factors and their ambiguous influence on the ratio of currencies depending on the specific situation are taken into account.