Russian national currency may fall again in the next few days, surpassing the mark of 70 rubles per dollar. Such a scenario would be real if the US Federal Reserve System will decide to raise its key rate from zero.
The increase of the emergency key rate will lead to the growth of the dollar against all currencies, it will particularly affect extractive and developing countries.
Christopher Dembik from Saxo Bank notes that the national currencies in such countries have already fallen against the dollar by 10-40% from the beginning of the year. The new currency depreciation will lead to another "panic and confusion."
A money manager at Raiffeisen Capital, Konstantin Artemov, believes that if the US Federal Reserve will raise the rate at 0.25-0.5%, then "the market expects increased volatility in commodity markets and in the markets of commodity currencies, including the ruble."
According to the expert, the exchange rate of the Russian currency will return to the value of 70 rubles per dollar for about two weeks, Gazeta.ru reports.
The Associate Professor of the stock markets and financial engineering department of the Faculty of Finance and Banking of RANEPA, Sergey Hestanov, told Vestnik Kavkaza that he expresses doubts that the US Federal Reserve System will make such a decision. "I think that the existing rates will be left unchanged with a probability of 80%. If not for the devaluation, which recently happened in China, there would be a very high probability that rates will be raised. The weakening of the yuan has a strengthening effect on the US dollar, which reduces the competitiveness of US products, and the increase in interest rates also has a strengthening effect on the dollar. Therefore, such an excessive strengthening of the dollar is not desirable for the US economy," he explained.
"Therefore, the most likely scenario is one where the US Federal Reserve System will leave rates unchanged. The balance of probabilities, that it will be raised or left at the same level, is about 20 to 80," the expert believes.
Regarding the impact of a possible rise in interest rates on the ruble, the economist said that we shouldn't overstate it. "If the rate is increased, it will put pressure not only on the ruble, but also on all other currencies, it will be about a quarter of a percent," Sergey Hestanov said.
A leading researcher at the Institute of Applied Economic Research of the Russian Presidential Academy of National Economics and Public Administration, Alexander Abramov, in his turn, said that the rate will be raised by 0.1-0.25%. He explains this by saying that "the growth in the United States is very high. Unemployment is at a historic low of 5.1%. In fact, inflation is also quite close to the target of 2%" he noted.
The expert also regards a major impact of this decision on the ruble as unlikely. "I think it will not have a strong effect, because it will be a tiny, close to zero boost. And secondly, the markets have simply adapted to it," Alexander Abramov explained.
The chairman of the National Foreign Exchange organization, Dmitry Piskulov, noted that "the US Federal Reserve System has a very 'uncomfortable' position for a decision now." "It is ready for a certain increase in rates, because certain conditions are met, particularly the growth of the US economy, and the improvement of the labor market," he said.
"However, now is an extremely uncertain time, and analysts' opinions were divided in half. Some say that the US Federal Reserve System may raise the rate by 0.25%. About half of them say that most likely the members of the Federal Commission on Open Market Committee will not do so because of external factors, such as the slowdown in the world economy and the expected strong position of China," the expert added.
"Therefore, I think that today an increase of the rate is not likely to happen, and the Federal Reserve will said that, in spite of the improved macroeconomic indicators, the situation in the world economy and the state of the financial markets does not allow them to make such a decision," Dmitry Piskulov suggested.
