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Ruble to resist US Federal Reserve System

The US Federal Reserve System announced a decision on key interest rates on Wednesday night, which is likely to be increased for the second time in 10 years.

It means increased risks for the ruble, because a rate increase means a rise of the dollar andshould increase pressure on oil marketas well.

Besides that, analysts are expecting the US Federal Reserve System’s forecast of further rate increase, which will also be an unfavorable factor for the Russian currency.

Nevertheless, the ruble has greatly strengthened recently against the background of rising price of oil and expectations for mitigation of sanctions by the United States, so the decline will not be strong. We can expect 64-65 rubles per dollar, so it is quite comfortable level for the economy and the budget.

Considering the situation in the oil market, further devaluation is hardly possible. In addition, the inflow of speculative capital to Russia will resume, when traders and investors adapt to the new rate in the United States, as the “carry trade” strategy will still be profitable.

Within this strategy, traders buy dollars at the expanse of carry financing at a low rate and then they invest money in ruble assets. It is possible to earn a stable and guaranteed profit due to the difference between the ruble and the dollar rate.

However, the new capital will be smaller, but the ruble can successfully resist the US Federal Reserve System’s factors in the near future.

Source: rusvesna

  • December 16, 2016 2:46 PM MSK
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