There are factors that affect the exchange rate. What affects exchange rates
Ministry of Education and Science of the Russian Federation
federal state autonomous educational institution higher professional education
"Northeastern federal university named after M.K. Ammosov"
Financial and Economic University
Department of World Economy
Russian-French branch
Abstract on the topic: Exchange rate. Factors affecting its formation
Completed by: student of the group ME-RFO-09
Lungu Karina
Yakutsk 2013
Introduction
1. Exchange rates and factors influencing their formation
1 Exchange rate: definition, classification, methods of establishing
2 Factors affecting the value of the exchange rate
2.1 Inflation rates and exchange rate
2.2 State of the balance of payments
2.3 National income and exchange rate
3 Regulation of the exchange rate
The impact of the exchange rate on foreign trade
The main factors shaping the ruble exchange rate
Conclusion
List of sources used
Applications
Introduction
An exchange rate is the price of one country's currency expressed in another country's currency. The exchange rate is necessary for the exchange of currencies in the trade of goods and services, the movement of capital and loans; to compare prices on world commodity markets, as well as cost indicators of different countries; for periodic revaluation of foreign currency accounts of firms, banks, governments and individuals.
The relevance of this topic lies in the fact that the exchange rate has a significant impact on the country's foreign trade, since the competitiveness of its goods in world markets largely depends on its level. The exchange rate affects the direction of international capital flows. The decision to invest national capital in the assets of a country is made based on the expected real return on invested capital, which depends on the interest rate and expected changes in the exchange rate.
Distinguish firmly fixed and "floating" rates. Until 1973, fixed exchange rates were used, since 1973 - freely "floating", which are determined in the foreign exchange market under the influence of supply and demand of a particular currency. In currency practice, the sale of currency is usually carried out at a slightly higher rate (the seller's rate), and the purchase is carried out at a lower rate (the buyer's rate). The difference between the two levels of the exchange rate (margin) is the bank's income from foreign exchange transactions.
The object of this work is exchange rates, and the subject is the study of the establishment of rates of one currency in relation to another and the consideration of methods and regimes for their regulation.
Convertible currencies are based on currency parity. However, the coincidence of the exchange rate with the currency parity is a phenomenon in modern conditions rare. The exchange rate depends on a number of factors: the purchasing power of the related monetary units; the inflation rate in the respective countries; the ratio of supply and demand for these currencies in the foreign exchange markets, etc. The state of the trade and balance of payments plays an important role for the country. If the latter develop negatively, then the exchange rate of the national currency of a given country usually falls. With an active trade and balance of payments, foreign exchange rates in the foreign exchange market of a given country are falling, and the rate of the national currency is rising, so in many countries, along with the official exchange rate, there is a free, or market, exchange rate. The official exchange rate is set by the country's central bank or a special government agency and legally fixes the content of the national currency in other monetary units with a strict limitation of fluctuations in market rates. According to the official parity, settlements of national banks and other national monetary and financial organizations are carried out among themselves and with international monetary and financial organizations. The market exchange rate is formed in the foreign exchange markets, it is also used for settlements between individuals, enterprises, firms participating in foreign trade turnover. A type of freely fluctuating market rate is a floating exchange rate.
State regulation of the exchange rate is aimed at its increase or decrease, based on the objectives of monetary policy, and is mediated by the formation of the exchange rate. The exchange rate is used in various areas of state regulation of the economy.
The purpose of the work is to consider the most important issues related to the exchange rate and its regulation.
1. Exchange rates and factors influencing their formation
Currency is a commodity, every commodity has a price. Price of commodity currency - exchange rate. The exchange rate is defined as the value of the currency of one country, expressed in the currency of another country.
The fundamental role of the exchange rate is related to:
The need to convert some monetary units into others when making international transactions (trade in goods and services, movement of capital and loans);
Comparison of prices in world commodity markets, as well as cost indicators of different countries;
Periodic revaluation of foreign currency accounts of firms, banks, governments and individuals.
The following factors influence the exchange rate:
Supply and demand in the foreign exchange market;
The solvency of the country;
Balance of payments balance;
Inflation.
Exchange rates are divided into two main types: fixed and floating. There is something in between "Policy of controlled navigation". The fixed exchange rate is based on currency parity, i.e. officially established ratio of monetary units of different countries. Floating exchange rates depend on the market supply and demand for the currency and can fluctuate significantly in value.
1.1 Exchange rate: definition, classification, methods of establishment
International economic transactions are associated with the exchange of national currencies. This exchange occurs according to a certain ratio.
The ratio between the monetary units of different countries, i.e. The price of one country's currency expressed in another country's currency (or international currency) is called the exchange rate.
The exchange rate is not a technical conversion factor, but the "price" of a given country's currency expressed in foreign currency or international currency units (ECU, SDR).
The exchange rate is necessary for international currency, settlement, credit and financial transactions.
For example, an exporter exchanges the proceeds of foreign currency for national currency, since under normal conditions, the currencies of other countries do not circulate as money on the territory of this state. The importer purchases foreign currency to pay for goods purchased abroad.
The cost basis of the exchange rate is purchasing power parity (PPP), i.e. the ratio of currencies according to their purchasing power.
Purchasing power expresses the average national price levels for goods, services, investments.
With the free exchange of banknotes for gold and the freedom of gold circulation between countries, the exchange rate slightly deviates from PPP due to the mechanism of gold dots. The mechanism of gold dots is the limits of the deviation of the exchange rate from monetary parity (usually no more than 1%): lower (at which the outflow of gold from the country begins) and upper (its inflow begins). Monetary parity - the ratio of the weight content of gold in monetary units (coins) of various countries.
In the conditions of paper money circulation, exchange rates can significantly deviate from PPP. For industrial developed countries this deviation is, according to the latest estimates, up to 40%. In many developing countries in countries with economies in transition, the exchange rate of the national currency is 2-4 times lower than the parity.
The deviation of the exchange rate from PPP occurs under the influence of supply and demand for the currency, which in turn depend on various factors.
Exchange rates are published in the press. Typically, current information contains quotes for the previous two days and short-term forecasts.
Many exchange rates can be classified according to various signs. (Table #1)
Table No. 1. Classification of types of exchange rate
CRITERION TYPES OF THE EXCHANGE RATE1. Fixing method Floating Fixed Mixed2. Method of calculationParity Actual3. Type of transactionsForward transactions Spot transactions Swap transactions4. Establishment methodOfficial Unofficial5. Attitude to Purchasing Power Parity of currencies Overstated Understated Parity6. Attitude towards the participants in the transaction Buying rate Selling rate Average rate7. Adjusted for inflationReal Nominal8. By method of saleCash sale rate Cashless sale rate Wholesale currency exchange rate Banknote
One of the most important concepts used in the foreign exchange market is the concept real and nominal exchange rate. The real exchange rate can be defined as the ratio of the prices of goods of two countries, taken in the corresponding currency. The nominal exchange rate shows the exchange rate currently in force in the country's foreign exchange market. An exchange rate at constant purchasing power parity: This is the nominal exchange rate at which the real exchange rate is unchanged. Also exists, effective exchange rate- a combined indicator (index) that characterizes the position of the currency of a certain country in comparison with the currencies of its main trading partners. The volumes of foreign trade are taken as index weights.
In addition to the real exchange rate calculated on the basis of the price ratio, you can use the same indicator, but with a different base. For example, taking for it the ratio of the cost of labor in the two countries. The exchange rate of the national currency may change differently in relation to different currencies over time. So, in relation to strong currencies, it can fall, and in relation to weak ones, it can rise.
That is why, in order to determine the dynamics of the exchange rate as a whole, the exchange rate index is calculated. When calculating it, each currency receives its own weight depending on the share of foreign economic transactions of this country attributable to it. The sum of all weights is one (100%). The exchange rates are multiplied by their weights, then all the values obtained are summed up and their average value is taken.
In modern conditions, the exchange rate is formed, like any market price, under the influence of supply and demand. Balancing the latter in the foreign exchange market leads to the establishment of an equilibrium level of the market exchange rate. This is the so-called "fundamental equilibrium".
The amount of demand for foreign currency is determined by the country's needs for the import of goods and services, the expenses of tourists of this country traveling to foreign countries, the demand for foreign financial assets and the demand for foreign currency in connection with the intentions of residents to carry out investment projects abroad.
The higher the foreign exchange rate, the less demand for it; the lower the foreign exchange rate, the greater the demand for it.
The amount of foreign currency supply is determined by the demand of residents of a foreign state for the currency of this state, the demand of foreign tourists for services in this state, the demand of foreign investors for assets denominated in the national currency of this state, and the demand for national currency in connection with the intentions of non-residents to carry out investment projects in this state.
Thus, the higher the rate of foreign currency in relation to the domestic one, the smaller the number of national subjects of the foreign exchange market is ready to offer domestic currency in exchange for foreign currency. And vice versa, the lower the exchange rate of the national currency in relation to the foreign one, the more subjects of the national market are ready to purchase foreign currency.
.2 Factors affecting the value of the exchange rate
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.
It is necessary to distinguish between market and structural (long-term) changes that affect the exchange rate.
Market factors affecting the exchange rate include:
State of the economy:
The rate of inflation;
The level of interest rates;
Activity of foreign exchange markets;
Currency speculation;
Monetary policy;
State of the balance of payments;
The degree of use of the national currency in international settlements;
Speeding up or delaying international payments.
The political situation in the country political factor).
The degree of confidence in the national currency in the national and world markets ( psychological factor).
Market factors are associated with fluctuations in business activity, the political and military-political situation, with rumors (sometimes hype), conjectures and forecasts. The exchange rate depends on how pessimistic or optimistic society is about government policy.
The higher the rate of inflation (rising prices) in a country compared to other countries, 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 for their exchange rate to fall.
The exchange rate is affected by the extent to which the currency is used in world markets. In particular, the predominant use of the US dollar in international settlements and in the international capital market causes a constant demand for it and maintains its exchange rate even in the face of a decline in its purchasing power or a deficit in the US balance of payments.
An increase in interest rates on deposits and (or) the yield of securities in any currency will cause an increase in demand for this currency and lead to its appreciation. Relatively higher interest rates and securities returns in a given country (in the absence of capital restrictions) will result in:
First of all,to the influx of foreign capital into this country and, accordingly, to an increase in the supply of foreign currency, its cheapening and appreciation of the national currency.
Secondly,deposits and securities in the national currency that bring higher income will contribute to the overflow of national funds from the foreign exchange market, reduce the demand for foreign currency, depreciate the foreign currency and increase the national currency.
With an active balance of payments of the country, the demand for its currency from foreign debtors grows, its exchange rate may rise.
Important economic importance exchange rate predetermines the need for its state regulation.
Along with market factors, the impact of which is difficult to foresee, on the demand and supply of currency, i.e. the dynamics of its exchange rate is also influenced by relatively long-term trends that determine the position of a particular national monetary unit in the currency hierarchy (structural factors).
Structural factors include:
Competitiveness of goods in world markets and its changes. They are determined, ultimately, by technological determinants.
Forced export stimulates the inflow of foreign currency.
An increase in national income causes an increased demand for foreign products, while merchandise imports can increase the outflow of foreign currency.
Consistent increases in domestic prices relative to prices in partner markets increase the desire to buy cheaper foreign goods, while the tendency of foreigners to purchase goods or services that are becoming more expensive disappears. As a result, the supply of foreign currency decreases and the domestic currency depreciates.
Ceteris paribus, an increase in interest rates is a factor in attracting foreign capital and, accordingly, foreign currency, and can also lead to an increase in the cost of domestic. But raising interest rates has, as you know, a dark side: it increases the cost of credit and has a depressing effect on investment activity within the country.
The degree of development of the securities market (bonds, credit bills, shares, etc.), which are healthy competition for the foreign exchange market. The stock market can attract foreign exchange directly, but also attract national money that would otherwise be used to buy foreign exchange.
.2.1 Inflation rate and exchange rate
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. 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 inflation rate is especially high in countries with a large volume of international exchange of goods, services and capital.
.2.2 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. The passive balance of payments generates a downward trend in the exchange rate of the national currency, because. 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 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 influenced by the economic policy of the state in the field of regulation of the components of the balance of payments: the current account and the capital account. With an increase in a positive trade balance, the demand for the currency of a given country increases, which contributes to its appreciation, and when a negative balance appears, the reverse process occurs. A change in the balance of capital movement has a certain impact on the national currency exchange rate, which is similar in sign to the trade balance. However, there is also a negative impact of the 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 higher prices and depreciation of the currency.
.2.3 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 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.
1.3 Regulation of the exchange rate
exchange rate trade inflation
There is market and state regulation of the value of the exchange rate. Market regulation, based on competition and the operation of the laws of value, as well as supply and demand, is carried out spontaneously. State regulation is aimed at overcoming the negative consequences of market regulation of foreign exchange relations and at achieving sustainable economic growth, equilibrium of the balance of payments, reducing the growth of unemployment and inflation in the country. It is carried out with the help of monetary policy - a set of measures in the field of international monetary relations, implemented in accordance with the current and strategic goals of the country. Legally, monetary policy is formalized by currency legislation and currency agreements between states.
Measures of state influence on the value of the exchange rate include:
Currency interventions;
Discount policy;
protectionist measures.
The most important instrument of the monetary policy of states is foreign exchange intervention - the operations of central banks in the foreign exchange markets for the purchase and sale of the national currency against leading foreign currencies.
The purpose of foreign exchange interventions is to change the level of the corresponding exchange rate, the balance of assets and liabilities in different currencies, or the expectations of foreign exchange market participants. The operation of the mechanism of foreign exchange interventions is similar to that of commodity interventions. In order to increase the rate of the national currency, the central bank must sell foreign currencies, buying up the national one. Thus, the demand for foreign currency decreases, and, consequently, the national currency rate increases. In order to depreciate the national currency, the central bank sells the national currency by buying foreign. This leads to an increase in the exchange rate of a foreign currency and a decrease in the exchange rate of the national currency.
For intervention, as a rule, official foreign exchange reserves are used, and changes in their level can serve as an indicator of the extent of government intervention in the formation of exchange rates.
Official interventions can be carried out by various methods - on exchanges or on the interbank market, through brokers or directly through transactions with banks, for a period or with immediate execution.
In addition, official foreign exchange interventions are divided into "sterilized" and "non-sterilized". "Sterilized" refers to interventions in which the change in official foreign net assets is offset by the corresponding changes in domestic assets, i.e. there is practically no impact on the value of the official “monetary base”. If the change in official foreign exchange reserves during the intervention leads to a change in the monetary base, then the intervention is "unsterilized".
In order for foreign exchange interventions to lead to the desired results in changing the national exchange rate in the long term, it is necessary:
Availability of the required amount of reserves in the central bank for foreign exchange interventions;
Market participants' confidence in the long-term policy of the central market;
Changes in fundamental economic indicators, such as the rate of economic growth, the rate of inflation, the rate of change in the increase in the money supply, etc.
Discount policy is a change by the central bank of the discount rate, including with the aim of regulating the value of the exchange rate by influencing the cost of credit in the domestic market and thereby on the international movement of capital. AT recent decades its importance for regulating the exchange rate is gradually decreasing.
Protectionist measures are measures aimed at protecting one's own economy, in this case the national currency. These include, first of all, currency restrictions.
Currency restrictions - legislative or administrative prohibition or regulation of operations of residents and non-residents with currency or other currency values. The types of currency restrictions are as follows:
Currency blockade
Prohibition on the free purchase and sale of foreign currency
Regulation of international payments, movement of capital, repatriation of profits, movement of gold and securities
Concentration in the hands of the state of foreign currency and other currency values.
The state quite often manipulates the value of the exchange rate in order to change the terms of the country's foreign trade, using such methods of currency regulation as a dual currency market, devaluation and revaluation.
2. The impact of the exchange rate on foreign trade
Exchange rates have a significant impact on the foreign trade of various countries, acting as a tool for linking the cost indicators of the national and world markets, influencing the price ratios of exports and imports and causing a change in the domestic economic situation, as well as changing the behavior of firms working for export or competing with imports.
Using the exchange rate, the entrepreneur compares his own production costs with world market prices. This makes it possible to identify the result of foreign economic operations of individual enterprises and the country as a whole. Based on the exchange rate ratio of currencies, taking into account the share of this country in world trade, the effective exchange rate is calculated. The exchange rate has a certain influence on the ratio of export and import prices, the competitiveness of firms, and the profits of enterprises.
Sharp fluctuations in the exchange rate increase the instability of international economic, including monetary and financial relations, cause negative socio-economic consequences, losses for some countries and gains for others.
In general, the depreciation of the national currency provides an opportunity for the exporters of this country to reduce the prices of their products in foreign currency, receiving a premium when exchanging the proceeds of a more expensive foreign currency for a cheaper national currency and have the opportunity to sell goods at prices below the world average, which leads to their enrichment due to material losses of their countries. Exporters increase their profits by exporting goods in bulk. But at the same time, the depreciation of the national currency increases the cost of imports, since in order to receive the same amount in their own currency, foreign exporters are forced to raise prices, which stimulates price increases in the country, a reduction in the import of goods and consumption, or the development of national production of goods instead of imported ones. The depreciation of the exchange rate reduces the real debt in the national currency, increases the burden of external debt denominated in foreign currency. The export of profits, interest, dividends received by foreign investors in the currency of host countries becomes unprofitable. These profits are reinvested or used to purchase goods at domestic prices and then export them.
As the exchange rate rises, domestic prices become less competitive, export efficiency falls, which can lead to a reduction in export industries and national production as a whole. Imports, on the contrary, are expanding. The influx of foreign and national capital into the country is stimulated, and the export of profits from foreign investment is increasing. The real amount of external debt denominated in depreciated foreign currency is decreasing.
Many countries manipulate exchange rates to achieve their goals, both in the field of economic development and in the field of protection against foreign exchange risk. Manipulation includes a whole range of measures - from artificial underestimation or, conversely, overestimation of national currencies, the use of tariffs and licenses to the intervention mechanism.
An overvalued national currency is an official rate set at a level above the parity rate. In turn, the undervalued exchange rate is the official rate set below parity.
The gap between external and internal currency depreciation, i.e. the dynamics of its exchange rate and purchasing power, has importance for foreign trade. If the internal inflationary depreciation of money outstrips the depreciation of the currency, then other things being equal, the import of goods is encouraged in order to sell them on the domestic market at high prices. If the external depreciation of the currency overtakes the internal one caused by inflation, then conditions arise for currency dumping - mass export of goods at prices below the world average, associated with the fall in the purchasing power of money lagging behind the depreciation of their exchange rate, in order to force out competitors in foreign markets.
Currency dumping is characterized by the following:
The exporter, buying goods on the domestic market at prices that have risen under the influence of inflation, sells them on the foreign market for a more stable currency at prices below the world average;
The source of the reduction in export prices is the exchange rate difference arising from the exchange of the proceeds of a more stable foreign currency for a depreciated national one;
The export of goods on a mass scale provides super-profits for exporters.
The dumping price may be lower than the production price or cost. However, too low prices are unprofitable for exporters, because competition with national goods may arise as a result of their re-export by foreign counterparties.
Currency dumping, being a kind of commodity dumping, differs from it, although they are united by common feature- export of goods low prices. But if during commodity dumping the difference between domestic and export prices is repaid mainly at the expense of the state budget, then with currency dumping - at the expense of the export premium. Currency dumping first began to be practiced during the world economic crisis of 1929-1933. Its immediate prerequisite was the uneven development of the world currency crisis. Great Britain, Germany, Japan, the USA used the depreciation of their currencies for junk exports of goods.
Currency dumping exacerbates contradictions between countries, disrupts their traditional economic ties, and increases competition. In a country that implements currency dumping, exporters' profits increase, and the standard of living of workers decreases due to an increase in domestic prices. In the country that is the object of dumping, the development of sectors of the economy that cannot compete with cheap foreign goods is hindered, and unemployment is increasing.
In 1967, at the conference of the General Agreement on Tariffs and Trade (GATT), the international Antidumping Code was adopted, which provides for special sanctions in the application of dumping, including currency.
Sometimes different exchange rate regimes are established for various participants in the foreign exchange market, depending on the operations being carried out: commercial or financial. Often the official exchange rate is used for commercial transactions, and the market rate for transactions related to the movement of capital. The exchange rate for commercial transactions is usually undervalued. Initially, for countries that have artificially undervalued their own currency, there is a recovery in the economy, caused by an increase in the competitiveness of exports. However, further restrictions on the intra-industry and inter-industry redistribution of resources are growing, most of national income is directed to the sphere of production by reducing the share of consumption in it, which leads to an increase in the level of consumer prices in the country, due to which there is a deterioration in the standard of living of workers. The artificial maintenance of a constant exchange rate, the level of which differs significantly from parity, can also have a negative impact on the change in the proportions of the national economy, leading to the consolidation of a one-sided orientation in the development of individual sectors of the economy.
Thus, changes in the exchange rate affect the redistribution between countries of the part of the total social product that is sold in foreign markets. Under conditions of floating exchange rates, the impact of exchange rates on pricing and the inflationary process increases.
In the conditions of floating exchange rates, the influence of their changes on the movement of capital, especially short-term capital, has increased, which affects the monetary and economic position of individual states. As a result of the influx of speculative foreign capital into a country whose exchange rate is rising, the volume of loan capital and investment may temporarily increase, which is used to develop the economy and cover the state budget deficit. The outflow of capital from the country leads to their shortage, the curtailment of investments, and the growth of unemployment.
The consequences of exchange rate fluctuations depend on the monetary and economic potential of the country, its export quota, positions in international economic relations. The exchange rate serves as an object of struggle between countries, national exporters and importers, and is a source of interstate disagreements. For this reason, exchange rate problems occupy a prominent place in economics.
3. The main factors that shape the ruble exchange rate
The formation of the ruble exchange rate is carried out on the basis of the regulation of supply and demand in the foreign exchange market under the influence of several dozen factors that are structural, opportunistic, political, economic, legal and psychological and directly and indirectly affect the market exchange rate of the ruble. The factors influencing the formation of the ruble exchange rate can be divided into three groups:
Long-term (directly determine the purchasing power parity of the currency) - the volume of GNP, the amount of money supply in circulation, the level of inflation, the level of interest rates;
Medium-term (affect the ratio of supply and demand of currency in the foreign exchange market) - the state of the country's balance of payments, unemployment rate, index industrial production, the level of the interest rate, methods of state regulation of the foreign exchange market, inflationary expectations, the level of development of the sectors of the financial market adjacent to the foreign exchange sectors, the degree of freedom of capital flow between various sectors of the economy;
Short-term (all other factors that arise unexpectedly and are unpredictable) - the expectations of economic agents, the appointment and dismissal of senior officials, political assassinations, wars, etc.
Ceteris paribus, an increase in GNP leads to an appreciation of the national currency. GNP growth means the stability of the economy, an increase in industrial production, an influx of foreign investment, an increase in exports, as a result of which the demand for the national currency from foreigners increases, its rate grows. The value of the money supply is directly related to the change in the exchange rate. The implementation of a tight monetary policy leads to a fall in prices, a reduction in the money supply, which, in turn, leads to an appreciation of the ruble. The inflation rate and the change in the exchange rate are inversely related - the higher the inflation rate, the faster the rate of the national currency falls. The inclusion of interest rates in the group of long-term and medium-term factors is explained by the fact that this exchange rate factor serves not only as an incentive for the movement of capital between countries, which makes it possible to classify it as a long-term factor, but is also a tool for regulating supply and demand in the foreign exchange market by the Central Bank, which puts it in the group of medium-term factors. The level of real interest rates determines the overall profitability of investments in the country's economy; changes in interest rates and the exchange rate are directly dependent. The balance of payments is the final document of the country's foreign economic activity for a certain period, the excess of receipts 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 creates a deficit in the balance of payments and leads to a fall in the exchange rate . The exchange rate of the ruble is inversely related to the unemployment rate and directly dependent on changes in industrial production.
Forecast of the euro and dollar for 2014 and the near future
The euro and dollar exchange rate is one of key indicators level of the world economy. Analyzing changes in this indicator is a major challenge for financiers, not only for preparing state budgets, but also for forecasting domestic and foreign policy states. Therefore, in order to give at least some forecasts as to whether the dollar and the euro will change next year, at least three parameters must be taken into account: the current state of the economy (obviously, it is worth considering real numbers), government policy and currency speculation.
What will affect the euro in 2014
§ First of all, the state of the economy affects the change in exchange rates. The higher the interest of potential foreign investors in investing in government institutions, stocks and securities, the better the economy feels accordingly. This is due to the fact that investors need to buy the money of the country in which they invest their funds. As a result, demand creates supply, and the exchange rate rises.
§ The second, no less important factor, which has many aspects, is the country's policy. Everything is natural here: the higher the level of corruption and crime in the state, the lower its attractiveness for investors will be and, as a result, rates will fall. In addition, the government can control inflation to some extent (for example, by using the refinancing rate), so that government policy can also have a significant impact on the euro and dollar exchange rate (see also: dollar exchange rate forecast for 2014).
§ As for currency speculation, there is no criminal element here at all, it is just an attempt to balance - at least artificially - supply and demand. Speculators and interventionists of a large scale can influence the state of the market in one or another period of time, mechanically setting certain trends. So, for example, the Central Bank itself is a so-called currency speculator due to the fact that it can protect the national currency with the help of interventions, selling off the currencies of other states. However, let's return to the forecasts for the next year regarding the exchange rates of the European and American currencies.
What is the euro exchange rate forecast for 2014
From an economic point of view, 2014 will be a small respite for the Russian budget and, as a result, for the population of the country. Looking ahead, we note that the question of what will happen to the euro is not so acute in comparison with the previous three years. Despite the fact that experts predict the second wave of the global financial crisis, the Ministry of Economic Development of the Russian Federation plans economic growth at the level of 4.4 percent, and by the end of the year the figure may grow to 4.7 percent. The short-term forecast is that the Russian economy will see a significant infusion of investments - their growth is expected to almost ten percent - but only on the condition that investments will be made not only by private structures, but also by state institutions.
The most pleasant aspect for the population will be the long-awaited reduction in prices for housing and communal services. True, the joy will not be long-term, and prices will fall only for the first half of the year, after which, due to complex indexation, they will again creep up, although not very significantly. Heating and electricity prices are expected to rise slightly in the second half of the year, but no one can predict the exact tariff rates yet. At the same time, it is already known that the subsistence minimum in the country next year will be 8,579 Russian rubles.
As for the economic scenario for 2014, it, as in the current year and in the previous year, is completely dependent on the level of oil prices and the global financial situation. Opinions of specialists regarding the level of inflation differ significantly. The Central Bank of the Russian Federation believes that the inflation rate will drop to the level of five percent. Developers of the federal budget agree with the same indicator. The Accounts Chamber is more skeptical: they believe that inflation may exceed the officially forecasted level by a percentage. Against this background, even the growth of the euro is not such a significant event.
Long-term forecast of the euro exchange rate for 2014, 2015, 2016-2026
The long-term forecast as to what changes the European currency will undergo comes down to the fact that, in relation to the ruble, the euro will fall, albeit slightly for another 13 years - until 2026. Next year, the euro exchange rate will not undergo significant changes: as of January-February, the exchange rate will be 41.24 rubles, by the end of the year its value will be reduced to 38 rubles. Approximate indicators of the ratio of the euro to the ruble for the next 13 years are as follows:
What are the forecasts for the United States dollar? It will also not undergo any special changes against the euro: the average annual rate is expected at around 1.3 dollars per euro. In relation to the ruble, the dynamics will also be relatively insignificant: at the beginning of the year, approximately 38.2 rubles, at the end - 33.9. But over the next 15 years, the dynamics of the dollar exchange rate can be quite significant: from 16 to 40 rubles per unit.
As for the ruble, its exchange rate looks quite good in the short term. In relation to the euro, it will be stable, and in view of the fact that the dollar, as mentioned above, will remain stable, then the Russian currency is unlikely to be forced to undergo strong fluctuations - if oil prices do not collapse, the Russian economy will be relatively stable . This stability is also due to a strong position in the world market.
Dollar exchange rate forecast for 2014
Now let's proceed directly to the analysis of what will happen to the dollar in the near future, that is, next year. The updated forecast of the socio-economic development of Russia in 2014, prepared by the Ministry of Economic Development, states that the average dollar exchange rate will be 33.4 rubles next year.
First of all, foreign exchange interventions of the Central Bank in support of the ruble can lead to some strengthening of the Russian currency. The high price of hydrocarbons on the world market can also reduce devaluation expectations.
Specialists high school economies are considering two possible scenarios in 2014:
1.optimistic scenario. The first option is based on the assumption that the average annual price per barrel of oil will be $100, and the external macroeconomic environment will be relatively favorable. The average dollar exchange rate in 2014 will be 34.9 rubles.
.negative scenario. The second option is considered by experts with a decrease in prices for "black gold", as well as an increase in the outflow of capital from Russia. Here everything will depend on the measures that will be taken by the Government of the country in the current situation. The expected average dollar exchange rate in 2014 may rise to 44.7 rubles.
Most analysts of the currency market agree that the national currency will become cheaper in 2014. The average annual price of the dollar will be 37 rubles next year. The fact is that the Russian economy, which is sitting on a raw material needle, has ceased to respond to positive changes in oil prices. Moreover, the negative dynamics is still affecting the ruble: the price of a barrel has fallen - the ruble is falling after them.
In conclusion, I would like to return to the situation on the global financial market. The US dollar exchange rate forecast for 2014 remains within the bounds of complete uncertainty. The policy of the American monetary system (including " printing press”) is so unbridled that it is not necessary to talk about a real, calculated forecast at all.
Conclusion
An exchange rate is the price of the currency of one country expressed in terms of the currency of another country. The exchange rate shows the ratio of currencies in the market. The cost basis of the exchange rate is the purchasing power parity of currencies, so what closer course to purchasing power parity, the more economically justified it is. The problem of exchange rate formation occupies an important place in the country's monetary and economic policy, since changes in the exchange rate ratios of currencies affect the redistribution of part of the country's GDP through the world markets for goods, services, and capital.
There are several types of exchange rates, such as: nominal, real, parity, actual, cross rate, spot rate, fixed and floating. The last two courses in the practice of international relations are the main ones. Currently, Russia has a floating exchange rate regime, which depends on supply and demand on the country's currency exchanges, primarily on the MICEX. The official exchange rate of the US dollar against the ruble is set by the Central Bank of the Russian Federation based on the results of trading on the MICEX. Currency exchanges also operate in other cities of Russia - in St. Petersburg, Rostov-on-Don, Yekaterinburg, Novosibirsk and Vladivostok.
When forecasting the exchange rate, the multifactor nature of its formation in the market is taken into account, especially those exchange rate factors that dominate in a particular situation. The following factors influence the value of the exchange rate: the ratio of demand and supply of currencies, the level of inflation, the level of interest rates and the profitability of securities, the state of the country's balance of payments, economic crises, wars, natural disasters, etc.
The Exchange Rate Mechanism is a methodology by which members of the European Monetary System maintain the exchange rates of their currencies within a range agreed with other countries. With the introduction of floating exchange rates, the regulation of the exchange rate through the IMF has weakened. In modern conditions, interstate regulation of exchange rates is carried out mainly within the EU.
Basically, the regulation of the exchange rate is carried out through foreign exchange interventions, discount policy, protective measures.
The main legislative act in the field of currency relations of the Russian Federation is the Law "On currency control and currency regulation", as well as other laws and regulations.
The Bank of Russia establishes and publishes the official exchange rates of foreign currencies against the ruble.
Central banks carry out monetary policy to maintain the market rate of national monetary units. Their role is reduced mainly to preventing sharp fluctuations in the exchange rates of national money, to keep them within certain limits. Central banks regulate the activities of commercial banks in conducting foreign exchange transactions, take measures against excessive speculation in the foreign exchange markets. The state, through the central bank, determines the norms for the sale and purchase of currencies, regulates loans in foreign currency and carries out other types of intervention in the foreign exchange operations of banks.
It is in Russia's best interests to have currency stability, in which exchange rate fluctuations are minimal. This would be facilitated by a system of fixed currency parities. Such a system existed until 1961, when currencies floated freely for the first time in history. But such a reform (sometimes called the new Bretton Woods) is unlikely in the near future, since the United States opposes it, so Russia has to adapt to what is, no matter how bad it may be, and look for the most profitable, least losing for her option. But the current monetary policy is far from the best.
Glossary
No. new concept Contents 1 Devaluation devaluation of the monetary unit in relation to currencies of other countries. 2 Foreign exchange market is a system of interaction between demand for foreign currency and its supply. issuing bank, consisting in buying or selling the currency of their country to maintain its exchange rate. 5 The exchange rate is the price of the monetary unit of one country, expressed in the monetary units of other countries. -currency relations based on the performance of gold as a monetary commodity.8 Currency convertibility from direct state intervention in the exchange process.9 Either the average rate of interest at which banks in London lend in eurocurrencies to first-class banks by placing deposits with them.10 Floating exchange rates banks and governments of various countries use to store their reserves. It is this definition that is used in modern economic literature and is given both in dictionaries and in scientific articles. One of the most important features of a reserve currency is its stability as a means of payment. In other words, the use of a reserve currency by economic agents implies a minimal risk of loss due to fluctuations in its value. One of the factors of currency stability is its free convertibility. Thus, if the monetary unit is stable and can be freely exchanged for other currencies at any time, this inspires the confidence of economic agents, and they will use it for settlements among themselves.
List of sources used
1Currency portfolio / Ed. coll. Yu.B. Rubin, E.D. Platonov. M.: SOMINTEK, 2003.-252 p.
2Dadalko V.A. International economic relations: Proc. allowance. Mn.: “Armita. Marketing, Management”, 2002.-p. 590.
Money. Credit. Banks: Textbook for universities / E.F. Zhukov, L.M. Maksimova, A.V. Pechnikov and others; Ed. prof. E.F. Zhukov. M.: UNITI, 2002.-S. 562.
4Maximo W. Eng, Francis A. Lees, Lawrence J. Mauer. World finance. Per. from English, - M .: LLC Publishing and Consulting Company "DeKA", 2002.-420 p.
5 International monetary and financial relations: Textbook / Ed. L.N. Krasavina. . 2nd ed., revised. and additional M.: Finance and statistics, 2002.-p. 675.
6International monetary and credit relations, a guide for preparing for exams. M .: "Prior", 2002.-S. 418.
7Shmyreva A.I., Kolesnikov V.I., Klimov A.Yu. International monetary and credit relations. St. Petersburg: Peter, 2003.-685 p.
Annex A
Rising dollar exchange rate and depreciation of the ruble with domestic price growth:
Positive Consequences Negative Consequences 1. Stimulating exports and restricting imports, which improves the state of the balance of payments1. An increase in the burden of servicing external public debt, as more government spending is required to purchase foreign currency, which can lead to an increase in the state budget deficit; 2. Rising prices for imported goods, which stimulates the general level of inflation, since the increase in the costs of imported factors of production leads to an increase in the cost of final products, which in general in the economy leads to an increase in the cost of living
Stable exchange rate of the dollar and the ruble with an internal price increase:
Positive Consequences Negative Consequences 1. A fixed exchange rate limits inflation, as import goods (consumer and production factors) do not rise in price. 2. Creates strong competition between domestic and foreign suppliers and thereby contributes to the rehabilitation of the economic activity of enterprises (bankruptcy of inefficient enterprises). 3. Helps to reduce the dollarization of the economy, since with a stable dollar exchange rate it is not profitable to accumulate funds in foreign currency accounts (the interest rate on deposits in foreign currency accounts in domestic banks approximately corresponds to interest rates in foreign banks), which strengthens the position of the ruble as a means of payment. Exports are declining, as the costs of exporters are growing with the continuing growth of inflation, which leads to a deterioration in the state of the balance of payments. 2. The threat of bankruptcy for domestic producers is growing, as imported goods become relatively cheap in the face of rising inflation. 3. The above could worsen external debt servicing, exacerbate government deficits, and fuel a recession.
Annex B
From November 20, 2013, the Central Bank of the Russian Federation established the following foreign exchange rates against the ruble of the Russian Federation without the obligation of the Bank of Russia to buy or sell these currencies at this rate
Digit. CodeLetters kodEdinitsValyutaKurs036 AUD1 Australian dollar30,6532944 AZN1 Azerbaijan manat41,6313051 AMD1000 dramov80,6574974 BYR10000 Armenian Belarusian Bulgarian rubley34,9516975 BGN1 lev22,5315986 BRL1 Brazilian real14,4049348 HUF100 Hungarian forintov14,8179410 KRW1000 Vaughn Republic Koreya30,8805208 DKK10 Danish kron59,0918840 USD1 Dollar SSHA32 , 6098978 EUR1 Evro44,0624356 INR100 Indian rupiy52,4822398 KZT100 Kazakh tenge21,3066124 CAD1 Canadian dollar31,2624417 KGS100 Kirghiz somov66,6867156 CNY10 Chinese yuaney53,5306428 LVL1 lat62,7232440 LTL1 Latvian Lithuanian lit12,7666498 MDL10 Moldovan leev25,0845946 RON10 New Romanian leev98 , 9795934 TMT1 New Turkmen manat11,4320578 NOK10 Norwegian kron53,2422985 PLN1 Polish zlotyy10,5588960 XDR1 SDR (special Drawing rights) 49,9246702 SGD1 Singapore dollar26,1758972 TJS10 somoni68,3386949 TRY1 Tajik Turkish Uzbek lira16,1299860 UZS1000 sumov14,8903980 UAH10 Ukrainian UAH39.7972826 GBP1 United Kingdom Pound Sterling52.5213203 CZK10 CZK16.2343752 SEK10 Swedish Krona49.2886756 CHF1 Swiss Franc35.7446710 ZAR10 South African Rand32.2152392 JPY100 Japanese Yen32.6833
On the exchange rate change influenced by supply and demand. The relationship between supply and demand is influenced by various factors related to such economic indicators like balance of payments, money, value, price, interest, etc.
The main factors affecting the exchange rate, can be divided into conjunctural and structural.
Among the conjuncture factors- the political situation in the country, business activity, forecasts, rumors and guesses among the population. And if market factors are difficult to predict in advance, there are also long-term (structural) factors that affect currency quotes.
Structural factors affecting the exchange rate:
national income growth leads to increased demand for imported goods. At the same time, commodity imports can lead to an outflow of foreign currency;
inflation rate. The higher the inflation rate, the lower the exchange rate (unless other factors influence). The stabilization of the exchange rate occurs on average in a two-year period;
payment balance. Demand for the national currency from external debtors increases with an active balance of payments. A passive balance of payments leads to a depreciation of the currency. In a modern economy, the balance of payments is affected by the international movement of capital, as the emerging securities market competes with the foreign exchange market. In developing countries, the stock market can slow down the growth of the foreign exchange rate, since free cash is diverted from the exchange for hard currency;
difference in interest rates between countries. An increased interest rate leads to an inflow of foreign capital, and a lower one to an outflow;
the state of the foreign exchange market and speculative transactions with currency. A downward trend in the exchange rate of a currency leads to financial institutions further weaken its position by selling to more stable currencies. Currency markets, reacting to political and economic changes, expand the possibilities of currency speculation;
An important factor affecting the exchange rate is degree of use of the currency in the international and European markets. For example, up to 70% of the Eurobank's settlements are made in US dollars, which determined the scale of demand for this currency;
degree of confidence in the currency, which depends on the political, economic situation and other factors affecting the exchange rate;
monetary policy of the state. The change in the exchange rate is influenced by the ratio of market and state regulation. The market reflects the real exchange rate - an indicator of the state of the economy, finances, money circulation, the degree of confidence in the currency. The state regulates the exchange rate, following the objectives of monetary and economic policy;
development of a competitive stock market. In the stock market, there can be a direct attraction of currency, as well as a “pulling away” of national capital, which could be used to buy currency in the national market. Stock market activity is a relatively new factor influencing the exchange rate.
Fundamental analysis is a term for a number of methods for predicting the market (stock) value of a company and the movement of exchange rates based on the analysis of financial and production indicators.
Fundamental factors have a significant impact, but they do not give a 100% guarantee of the desired change in quotes. Before opening a position, it is necessary to study the trends present on the market, and only after that make a decision in which direction to open a position. When working on financial markets, two types of analysis are used - technical and fundamental. Both types of analysis try to predict the future in relation to the movement of quotes. The difference between them is that fundamental analysis looks at the market more from the point of view of the functioning of the economy than from the point of view of the functioning of the market itself (technical analysis).
The school of fundamental market analysis arose with the development of applied economics. She took as her basis knowledge about the macroeconomic life of society and its impact on the dynamics of prices for specific goods. The main task of the school of fundamental analysis is to form and predict new trends in price dynamics, therefore, the purpose of fundamental analysis is to analyze and forecast fundamental factors and their influence on trend price dynamics.
Strategic investors who make long-term investments focus on fundamental analysis in their work, although they miss short-term technical price fluctuations.
The concept of the exchange rate and basic definitions.
Exchange rate- the price (quotation) of the monetary unit of one country, expressed in the monetary unit of another country, precious metals, securities.
There are such types of exchange rates:
- fixed exchange rate;
- fluctuating exchange rate - fluctuates within the corridor;
- floating rate, which changes depending on market demand and supply;
- current SPOT rate (TOD i TOM);
- forward rate;
- futures rate;
- market and calculated average weighted exchange rate for trades.
1) according to the method of regulation:
2) by types of market:
Externally, the exchange rate is presented to the participants of the exchange as a coefficient of conversion of one currency into another, determined by the ratio of supply and demand in the foreign exchange market. However, the cost basis of the exchange rate is the purchasing power of currencies, which expresses the average national levels of prices for goods, services, investments. This economic category is inherent in commodity production and expresses production relations between commodity producers and the world market. Since value is a comprehensive expression of the economic conditions of commodity production, the comparability of the national monetary units of different countries is based on the value relation that develops in the process of production and exchange. Producers and buyers of goods and services use the exchange rate to compare national prices with prices in other countries. As a result of the comparison, the degree of profitability of the development of any production in a given country or investments abroad is revealed. No matter how the operation of the law of value is distorted, the exchange rate is subject to its action, expresses the relationship between the national and world economies, where the real exchange rate ratio of currencies is manifested.
When goods are sold on the world market, the product of national labor receives social recognition on the basis of an international measure of value. Thus, the exchange rate mediates the absolute exchange of goods within the world economy. The cost basis of the exchange rate is due to the fact that the international production price underlying world prices is based on national production prices in countries that are the main suppliers of goods to the world market.
The exchange rate is required for:
- mutual exchange of currencies in trade in goods, services, in the movement of capital and loans. The exporter exchanges the proceeds of foreign currency for the national one, since the currencies of other countries cannot circulate as legal means of purchase and payment on the territory of this state. The importer exchanges national currency for foreign currency to pay for goods purchased abroad. The debtor acquires foreign currency for national currency to pay off debt and pay interest on external loans;
- comparison of prices of world and national markets, as well as cost indicators of different countries, expressed in national or foreign currencies;
- periodic revaluation of foreign currency accounts of firms and banks.
Nominal exchange rate mechanism in the foreign exchange market is a regulated share of state participation and is called the exchange rate regime. There are administrative and market exchange rate regimes.
Administrative mode appears in the form plural exchange rates, i.e. is the presence of differentiated exchange rates of currencies according to different types operations, commodity groups and regions. The administrative regime is used as a stabilization measure in the context of an economic crisis to reduce inflation and to accumulate gold and foreign exchange reserves. The introduction of an administrative regime is a temporary step towards the normalization of the economic situation in the country and the transition to market conditions for setting exchange rates. For the first time, such a regime began to be used during the economic crisis of 1929-1933. after the abolition of gold monometallism.
Market Mode course formation is divided into three types:
- 1. A fixed regime is one to which countries have a pegged or fixed exchange rate. Such countries fix the value of their currency with zero or very narrow limits (no more than 1%) of such deviations from another foreign currency or a combined currency. The leaders in the list of reference currencies to which the national currency is tied are the US dollar and the euro. The countries of the European Union can serve as an example of 100% fixation. They fixed the exchange rates of their national currencies within the EU against other currencies and the new euro currency as of the last working day of 1998 and adhered to certain exchange proportions until the final introduction of the single euro currency.
- 2. A regime in which countries have limited exchange rate flexibility. Those. - this is such a regime when certain ratios between national currencies are officially established, which allow small fluctuations in the exchange rate in accordance with existing rules. This procedure for regulating exchange rates includes the regime of the currency corridor - the establishment of boundaries for fluctuations in the exchange rate of the national currency in order to stabilize the monetary and financial system
- 3. Mode with increased course flexibility. Exchange rates can move freely, changing under the influence of supply and demand factors, etc. This mode has subcategories:
- freely floating rate (freely fluctuating);
- managed fluctuating;
- exchange rate, which is periodically adjusted.
Factors affecting the exchange rate.
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. Among them are the following.
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. In modern conditions, the influence of the international movement of capital 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 institutions.
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 in currencies in an attempt to avoid devaluation risks. 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.
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 the Christmas and New Year holidays, there is an increase in business activity and the exchange rate.
political factors. In most cases, they have a direct impact on 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 executive power programs for overcoming the crisis and development of 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
- 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 - purchase by a special financial company of all monetary claims of the exporter to a 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 the issues of qualification of administrative staff, employees, level of organization, rules necessary for the effective preparation and implementation of the project are investigated.
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.
- International Monetary Fund, its institutions and main activities.