Why the ruble depends on the dollar. What determines the exchange rate of the dollar Factors affecting the exchange rate of the dollar against the ruble

Speaking about the ruble exchange rate, the Bank of Russia never gives exchange rate forecasts. He cannot answer the question of how much the ruble will cost in a day, a week or a month. At the same time, the regulator largely affects how much the currency will cost. Central Bank experts explained to The Village how the exchange rate is formed, what factors influence it, what happened to the ruble last year and what is happening right now.

How the exchange rate is formed

There are different exchange rate regimes around the world, but in most countries it is determined by market processes. Somewhere Central banks interfere in the exchange rate a little more, somewhere a little less.

If the intervention of the Central Bank is minimal, the rate is called free floating. The Central Bank can manage the exchange rate through the purchase or sale of foreign currency (these are interventions). If external factors push the national currency up too much, the Central Bank accumulates its reserves in foreign currency. Conversely, when the exchange rate drops sharply, the Central Bank is forced to spend its reserves. If the negative factors are of a long-term nature, the reserves can be squandered very quickly, and as a result, the exchange rate will still not be able to be maintained.

If the Central Bank has a lot of reserves, it can generally fix the exchange rate, that is, declare that it is ready to buy and sell any amount of currency at a pre-announced rate. In this case, no one will exchange currency at a different rate, although this is not prohibited. A fixed exchange rate policy was popular in the last century, but now most countries have moved away from it.

The ruble exchange rate was rigidly fixed in 1995-1998, was flexible, but tightly controlled in 2000-2008. It was after the financial crisis of 2008, when maintaining the exchange rate of the ruble cost Russia about a third of its gold and foreign exchange reserves, that it was decided to move from the policy of managing the exchange rate to managing interest rates and targeting inflation by 2015. ( About what affects inflation, we already. - Approx. ed.).

How the ruble fell

As scheduled, by the end of 2014, the ruble began to float freely.
From that moment on, the Central Bank has neither explicit nor hidden goals for the exchange rate, and foreign exchange interventions (that is, the purchase of a large amount of currency to maintain the exchange rate) are resorted to only in cases of threats to financial stability. When and how the Central Bank's foreign exchange interventions took place, you can see.

The cancellation of the current currency corridor was announced on November 10, and in fact the Central Bank's foreign exchange interventions ceased on December 16.

On this day, the exchange rate fluctuations amounted to 27%. For comparison: at about the same time, Switzerland refused to peg the exchange rate to the euro, and the fluctuations in the franc exchange rate within one day reached 31%. The sharp depreciation of the ruble against the dollar and the euro was very painful, but it was impossible to postpone the transition to a floating exchange rate.

What happened then to the ruble exchange rate is now often called devaluation.
But strictly speaking, this is not the case. Devaluation is a planned and controlled decrease in the exchange rate by the Central Bank in a controlled manner. This has happened twice in the recent history of Russia. The first time - in August 1998, the second - during the global financial crisis in 2008, when the Central Bank pursued a policy of gradual devaluation with the help of massive interventions.

What factors influenced the ruble exchange rate

The ruble has been under unprecedented pressure since February-March 2014. The difficult geopolitical situation and the introduction of financial sanctions have led to an increase in the risk premium when investing in Russian assets. All this, together with the negative mood of investors, increased the pressure on the ruble exchange rate. The situation was stabilized in March only thanks to massive foreign exchange interventions, that is, at the cost of a significant reduction in Russian gold and foreign exchange reserves.

It was possible to stabilize the situation in March only thanks to massive foreign exchange interventions, that is, at the cost of a significant reduction Russian gold and foreign exchange reserves.

In the future, a steady downward trend in oil prices was added to the negative factors, and by the end of the year, the peak period of payments on external debts approached. All this caused an even greater depreciation of the ruble and created panic about the exchange rate and inflation. They were fueled by expectations of lower investment ratings for Russia and Russian companies, fears of introducing capital controls, and so on. Against this background, the rate fell to a level that was significantly below the fundamentally justified, or, in other words, determined by oil prices.

In December, the Bank of Russia partially compensated for the deteriorating situation with a sharp (first to 10.5%, then to 17%) increase in the key rate and a reduction to a minimum of interest rates on operations providing foreign exchange liquidity on a repayable basis. Simply put, if the Central Bank used to sell foreign currency, now it lends it.

How the ruble grew

After the dramatic period of late 2014 - early 2015 was over, the ruble exchange rate stabilized at a new equilibrium point. This happened for several reasons:

Oil prices have stopped falling and even rose by a third from the minimum level in 2014.

Fears of imposing restrictions on the movement of capital by the Russian authorities have gone, a round of downgrades of Russian country and corporate ratings has calmly passed.

There is almost no bad news in terms of foreign policy.

The policy of the Central Bank to provide liquidity (currency REPO auctions) has reduced the value of the currency for Russian borrowers.

The inevitable slowdown in the Russian economy turned out to be significantly lower than experts' expectations. The Central Bank believes that it will be much less than, for example, in the post-crisis period in 2009, since it was the ruble exchange rate that took the brunt of the blow.

When Russian assets that had fallen in price again turned out to be attractive among investors, the ruble began to win back its last year's fall.

What will happen next

The influx of investments cannot continue indefinitely, sooner or later it will weaken. This will happen when the exchange rate strengthens so much that the yield on some assets drops too much and ceases to compensate for the depreciation of the ruble expected by investors due to inflation. That is, the appreciation of the ruble will stop, and the exchange rate will stabilize around the new values, which, in fact, is already happening.

Most likely, there will be no more sharp jumps in the currency, but the ruble will continue to fluctuate up or down.

Due to the fact that the profitability of Russian foreign currency assets reached the level of last autumn, the Central Bank adjusted the rates on foreign currency REPO operations. This decision reduced the difference in returns between investing in dollar and ruble assets. At the same time, the ruble depreciated somewhat. Changes in interest rates on currency and ruble transactions of the Central Bank will continue to have some impact on the ruble exchange rate, along with other factors. Among them are changes in oil prices, the introduction or lifting of sanctions, the dynamics of inflationary expectations, the course of the monetary policy of other countries, and so on. Most likely, there will be no more sharp jumps in the currency, but the ruble will continue to fluctuate up or down as before.

We thank the Central Bank experts and First Deputy Chairman Ksenia Yudaeva for their help in preparing the material.

Recent events in our country have made many citizens think about what to do with their savings and how not to be in the red in the event of a possible devaluation of the national currency. The ruble is weakening. It is completely useless to deny it. But what determines the exchange rate? There are so many decisive factors. And what determines the exchange rate of the dollar to the ruble? What is the relationship between these currencies?

The ruble as the national currency of Russia

It is difficult to understand what the exchange rate depends on, without knowing what exactly affects the rate of your national currency. The ruble came to us from ancient times. But over time, the reasons for its strengthening and weakening have not changed at all. First of all, the trade balance affects the exchange rate. That is, the ratio of the amount of produced imports in relation to exports. This means that the more this ratio tends to zero, the less prerequisites there will be for concern. After all, if, for example, exports significantly exceed imports, then this can lead to a lack of competition and a decrease in the level of exports themselves. And if imports take a leading position, then this can lead to a sharp decrease in the amount of foreign currency in the country, which will lead to a decrease in the value of the domestic currency. Which, in principle, can be observed today in Russia. In general, not only this leads the ruble to an imbalance. There are many factors that can affect its growth or fall: geopolitics, inflation, GDP, unemployment, countries and other reasons.

The dollar as a world currency

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

Why is the dollar exchange rate higher than the ruble?

Russia is a very powerful state, but why is the dollar more expensive? And what determines the exchange rate of the dollar to the ruble? The ruble has not always been cheaper than the dollar. But recently this trend has simply taken root in Russia. For several decades, the dollar has been worth significantly more than the ruble. It is quite easy to explain this pattern. Prior to the abolition of the gold standard, the value of each currency was confirmed by the gold reserves of its state. Money differed only in weight, shape, design and quality of the metal. But after the abolition of the standard, various factors began to put pressure on each monetary unit. They later began to determine its value in relation to other currencies. There is not enough gold for everyone, and this is a fact. Therefore, most countries try not to issue more money than the goods produced in the country. This is done in order to avoid an economic crisis. The conclusion follows from this: the currency of the country that produces the most goods will occupy a leading position throughout the world. Today this country is America.

Exchange Rates. Interest rates

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

Why is the course moving?

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

Forex market

Recently, many have begun to resort to making money with the help of the Forex market. And at the same time, the question of what determines the exchange rates at Forex began to arise more and more often. The most important drivers of currencies in this market are two factors: exports and imports, as well as capital activity. Whatever you say, everything that concerns the currency and its value depends solely on trade relations between countries. After all, the higher the cost of goods produced in one's own country, the more expensive the currency will be. Well, enough has already been said about the activity of capital above. It is very important to note that the Forex market is for people who simply want to exchange one currency for another in order to use it. But today, most of the participants in this market are speculators who profit from the movement of the stock price. At the same time, they can use even small fluctuations in exchange rates for their speculation.

"Black gold" and currency fluctuations

What determines the exchange rate? As mentioned earlier, many factors play a role in shaping the value of each monetary unit. But the most noticeable influence on exchange rate fluctuations is exerted by the price of oil. This is especially reflected in the dollar equivalent. Recently, the United States has significantly increased the amount of extracted energy resources. In this regard, the price of oil was lowered from (to $50-60 per barrel). And this, first of all, had a negative impact on the state of the economy of many countries. Including Russia, which today is struggling with the problem of the fall of the national currency. Previously, when US oil consumption was at a high level, and the “shale revolution” had not yet swept the world, the dollar exchange rate reacted negatively to rising oil prices. Today the situation has changed dramatically.

World currencies and the dollar

The year 2014 was not an easy one for the financial market. And this affected not only Russia, but also a number of other countries. For example, by the end of the year, the dollar strengthened by 11% against the euro. The yen is in an even more difficult situation, the level of strengthening of the dollar amounted to 12%. Of course, the result of Russia is difficult to equate to the losses of these countries, because the ruble has fallen by almost 45% in a year! And the results of the virtual currency (bitcoin) have completely fallen to the bottom. Compared to November 2013, bitcoins have fallen in price against dollars by as much as 72%. Such currencies as the Indian rupee and the Chinese yuan suffered minimal losses this year. This behavior of currencies, first of all, is connected precisely with the fall in prices for "black gold".

Those unpredictable exchange rates!

The Forex market can often provide novice clients with useful information on how to predict currency rates. First of all, according to experts, it is necessary to follow all the events in the world of politics and economics. And also be sure to carefully consider the forecasts of leading analysts for the near future. Of course, in no case can one completely rely on someone else's opinion, but it is still necessary to listen. In order to try to predict the exchange rate for the near future, it is necessary to take into account interest rate parity, purchasing power parity and other nuances that are associated with the movement of exchange rates. Of course, not everyone is able to quickly learn all the intricacies of the financial market, but with a strong desire it is still possible!

The Russians have a natural question: why did the ruble stagger this time? The main reasons experts most often cite are the price of oil, threats of sanctions or tensions in the political situation. However, many more factors are involved in the formation of the exchange rate. Knowing the current state of a number of these indicators, you can even predict the future exchange rate of the ruble yourself.

First of all, experts identify fundamental factors that affect the state of the Russian currency:

1. Key interest rate of the Central Bank(otherwise - the refinancing rate). The overall profitability of investments in the country's economy depends on this indicator, since it is the key rate of the regulator that determines the interest on deposits and bonds. However, if the rate is too high, it can slow down economic growth and business activity due to higher borrowing costs. At the same time, an interest rate that is too low risks provoking an outflow of capital, since it will not be profitable for investors at low interest rates.


2. Inflation. High inflation stimulates prices to rise, thereby reducing the purchasing power of the currency. In addition, inflationary risks have a negative impact on the investment attractiveness of the country, which, accordingly, lowers settlements in rubles. It is worth noting that the increase in the key rate also affects the growth of inflation.


3. Payment balance. Can be positive and negative. A positive balance of payments means that the receipt of payments from abroad exceeded the volume of payments abroad. This state of affairs leads to the strengthening of the national currency. The negative balance is characterized by a reduction in the country's foreign exchange reserves and, accordingly, the weakening of the ruble.


4. Unemployment rate. An increase in this indicator leads to a decrease in the Russian currency, while a decrease leads to an increase in the ruble exchange rate.


5. Gross national product (GNP). A general macroeconomic indicator that reflects the state of the economy, the level of industrial production, the volume of investment and exports. The relationship between the exchange rate of the ruble and GNP is, rather, not direct, but indirect. If the GNP grows, therefore, the flow of investments increases, as well as exports, which means the demand for domestic currency. Accordingly, these factors strengthen the position of the ruble.


6. Industrial production index. The change in industrial production is directly proportional to the level of the exchange rate. The higher the level of industrial production, the more the exchange rate of the national currency tends to rise.

In Russia, an increase in the key rate most often weakens the national currency, and a decrease in the rate favorably affects the ruble exchange rate. This is largely due to the fact that the Central Bank raised this figure to 17% in 2014 and is now returning it to a normal value.

There are also external and regulatory factors that also determine the exchange rate of the Russian ruble:

There are plenty of reasons for the currency to weaken or strengthen. The most influential of them are the key rate, inflation rate, oil prices, geopolitics, and the information field. Since the ruble is very sensitive to changes in these factors, we recommend that you carefully monitor its exchange rate if you often have to deal with foreign exchange transactions. In addition, we advise you to keep savings in several currencies.

18.06.2014 81 734 48 Reading time: 15 min.

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 is very important for effective trading. Therefore, any person who wants to put in order and secure personal finances should have a good understanding of what the exchange rate depends on in order to quickly predict its changes and apply them in practice in order to increase their own financial well-being.

Factors affecting the exchange rate

Trade balance of the state

The trade balance 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 shortage of foreign currency. Conversely, when the trade balance is positive, skewed 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, the 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.

Macroeconomic indicators of the country

This includes indicators such as the 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.

The exchange rate is affected by both actual and forecast indicators, and especially sharp jumps in rates can be observed during the release of the indicator, if its actual value did not coincide with the forecast one.

Policy of the Central Bank of the country

The policy of the Central Bank is one of the fundamental factors. Here we should consider several directions of actions carried out by the Central Banks of the states, which have a strong influence on 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: for example, the US Federal Reserve System almost “continuously” 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.

Currency interventions

When the Central Bank needs to strengthen or weaken the national currency, it spends, 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 entities and individuals its debt obligations (the so-called state internal loan bonds 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.

Verbal Interventions

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.

The Central Bank is the body in the state, which is entrusted with maintaining a stable exchange rate of the national currency, therefore, it always has a number of effective levers in reserve, which it uses as necessary and possible.

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.

The implementation of large investment projects can plan both an outflow and an inflow of foreign 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.

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 unthinkable 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!

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 nevertheless, 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.

Force majeure

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, or lingering, if it continues for a long time, or has 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!

Estimate:

The US dollar is one of the most popular currencies in many countries of the world, including Russia. Traditionally, in times of economic turmoil and turmoil, this currency shows an upward trend, while domestic assets decline in value. Therefore, at the exchange offices and in banks you can see crowds of people who want the United States. There is even an expression that "rubles are certificates for money, and dollars are real money."

But without knowledge about the ruble and the US dollar, the population very often buys dollars at the peak of their value, and then sells them at the minimum price values. To correctly assess the prospects for exchange rates, you need to understand how they are formed. In this article, we will look at what determines the exchange rate of the dollar against the ruble.

Factors affecting the dollar

First of all, it is worth noting that the dollar is a freely convertible currency. This means that its dynamics is determined by supply and demand in the global interbank market relative to other world currencies. As a result, we can single out the formation of the US dollar against the ruble and other world currencies. Naturally, we will focus our attention on the US dollar / Russian ruble pair and analyze what the dollar exchange rate in Russia depends on.

The formation of the US dollar exchange rate is a multifactorial process, but the main ones can be divided into two groups: political and economic. However, first of all, it is necessary to understand the general specifics of the issue and the existence of dollars.

The dollar is the main reserve currency. Which, in turn, suggests that the central banks of other countries are acquiring US dollars to replenish their gold and foreign exchange reserves and make international payments. More than half of the volume of international payment transactions are carried out in US dollars. Moreover, if in Russia settlement in US dollars exists “unofficially”, then in a number of countries the US dollar circulates on a par with national currencies (Zimbabwe), and in some countries it is even a national currency (Marshall Islands, El Salvador).

In world history, the Bretton Woods monetary system (1944) is distinguished, according to which the US dollar was backed by gold ($35 per ounce), and all other currencies were backed by the US dollar. But in connection with the subsequent sharp decline in the US gold reserves and the negative balance of payments, this system showed instability. In the period from 1976-1978. it was replaced by the current Jamaican monetary system, the main principles of which are the absence of pegging of exchange rates to gold and their free convertibility. Exchange rates are now determined by supply and demand.

Currently, the US dollar is issued by the Fed (Federal Reserve System), which acts as the central bank of the United States. The Fed also sets the interest rate, thereby determining the cost of using money. Moreover, the Fed has a high degree of freedom in its decisions and is not directly subordinate to the US government, but, of course, carries out its actions in the interests of the US economy.

Political factors

The main political factors influencing the dollar/ruble pair include the price of oil. It would seem, how does the price of oil depend on the dollar? The fact is that it is denominated in dollars, so there are a number of features that affect exchange rates. So, if the US government needs money - dollars, then it issues bonds that the Fed buys and issues an equivalent amount of money, paying it off with the government for debt securities. In turn, the US government can already use this money as it sees fit.

In Russia, the process of injecting money into the economy is carried out differently. The Central Bank cannot issue rubles in this way at the expense of Russian bonds. In order to receive rubles from the Central Bank, Russia must put some asset/service on the international market (naturally, this is mainly oil and gas) and receive US dollars. It is against these US dollars that the Central Bank can already issue rubles at its own rate. Moreover, the US dollars that got into the Central Bank in this way can be spent on the purchase of American ones. Thus, this scheme often comes down to the issuance of US dollars and the purchase of real assets (for example, oil) for them. And Russia supplies assets to the world market for US dollars, under which rubles are printed, and US bonds are bought for the dollars themselves. Of course, such a scheme does not suit everyone and has a lot of disadvantages. Currently, a scheme for trading oil for rubles is being worked out, but it also has a lot of pitfalls.

Naturally, when the dollar price of oil rises in price, the ruble exchange rate also grows. If the dollar price of oil falls, then Russia has to depreciate the ruble. It turns out that oil-exporting countries benefit from a low dollar, while the United States, on the contrary, a stronger one.

Also, political factors include the overall economic stability in the country, since a strong state will have a consistently strong currency. Other countries will try to buy it, thereby supporting the demand, which drives the exchange rate up. And wars and conflicts, on the contrary, reduce the value of the currency, as they can lead to some uncertainty. Naturally, the statements of major political figures also affect the exchange rate.

Economic forces

The economic factors in the formation of exchange rates include the actions of the Fed in terms of changing the interest rate. If the rate rises, the rate rises, if it falls, it falls. Moreover, in terms of the Fed's activity on rates, one should highlight the so-called quantitative easing (QE) programs, which the Fed can introduce to stimulate the country's economy by buying bonds and lowering rates. As a rule, at the start of the next easing cycle, the currency may decline (because it becomes larger), but the market can also factor in the positive effect of this stimulus into the exchange rate, preventing it from falling lower. With a reduction in QE, the dollar becomes more expensive, and the market can include in its rate the overall achieved and expected effect of further development.

The population of Russia loves US dollars for their stability (but the dollar can also decrease in value), determined by the traditionally low inflation in the US (about 2%). Inflation is a measure of the depreciation of money, and in the US it is much lower than in Russia.

The balance of payments is also a significant indicator for the dynamics of the exchange rate. If it is positive, this is a favorable factor for the currency; if it is negative, it contributes to its decline. But in the United States, the balance of payments is consistently negative, since the main “asset” supplied by it to the world market is the dollar.

Rice. 1. US balance of payments (billion dollars) since 2013

Actually, the US dollar rate is to some extent determined by the faith of the world community in the economy of a given country and some dependence on its currency.

Conclusion

In order to correctly assess the prospects for the domestic economy, it is extremely important to understand what determines the exchange rate of the US dollar - the currency for which our main resource - hydrocarbons - is sold.