Exchange rates are constantly in a state of fluctuation, so as to avoid the risk of financial and economic nature, it is necessary to understand the mechanism of prediction and a mechanism that explains how the exchange rate is formed.
particularly relevant this issue today, as Russia seeks to get out of the dollar dependence, pursue an independent policy.To understand some of the difficulties encountered on this thorny path, you must understand how the exchange rate is formed in Russia and around the world.
little history
Until the thirties of the last century, most countries operated a so-called gold standard.According to him, in the currency of the gold content was installed.Government had to change its currency for gold.To support the system introduced strict relationship between the money supply in the country and its gold reserves.According to the gold content and shape their courses.For example, one US dollar was set twenty-three and twenty-two hundredths of a grain of gold, and one pound - one hundred and thirteen grains, that is, four point eighty-seven hundredths of times more.According to these calculations determine the course where one pound was equal to 4.87 dollars.
gold and foreign exchange system
After the thirties, and the Great Depression in America in most of the gold and foreign exchange system was installed, where exchange rates have been formed by attitudes towards a reserve currency, which was the dollar.Maintaining stability in exchange rates helped set up in 1944, the International Monetary Fund.By contributions stood out loans States experiencing financial difficulties.
floating exchange rate system
How is the exchange rate?In the seventies, to replace gold and foreign exchange system came to a system of floating exchange rates.Its meaning lies in the formation of exchange rates due to the relationship of supply and demand, as the securities on the Exchange.However, the exchange rate did not become completely free.When you reach a certain limit state had parity (as in 1979 in Europe), and the Central Bank of the country, coordinating their actions with other countries, officially changed course.If the change were to decrease, then there was a revaluation and increase - the devaluation.The limit is reached when the changes of a few percent, but in the nineties it has increased to fifteen percent.
revaluation and devaluation are not the only way of state intervention in the process of explaining how the exchange rate is formed.In order to avoid large fluctuations, they introduced the so-called foreign exchange intervention, which, if the exchange rate falls, they buy it, but if the opposite - sell.
mechanism is not always successful, as the owners of the national currency abroad are not subject to the instructions of their governments.For example, if the US raises the loan, the interest rate currency outside the United States remains the same, which makes them more attractive.
General factors influencing the formation of the exchange rate
How is the exchange rate on the stock exchange, banks and state as a whole.
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exports and imports.The higher prices in comparison to the foreign country, the more imports.Thus, the price of foreign currencies will be high.
with rising incomes will increase demand for imports, which will cause depreciation of the national currency.
On the other hand, with a high national income abroad, the price of foreign exchange is reduced.
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movement of capital.If desired, the investor get more foreign cash, deposits, shares, bonds and obligations for foreign currency price increases.
On the other hand, payments to any state increase rate of its currency.
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data output and waiting for the data.This data includes: the publication of host countries economic indicators, statements of changes in interest rates, main economic indicators and more.
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activity.A huge force on the movement of exchange rates, the Fund is working when investing in certain currencies.They have great resources, able to make a course to move in any direction.
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activities of exporters and importers.They are the users of the currency market, for sale and purchase of foreign currency.However, the impact is negligible and short-term, because the volume of foreign trade transactions are negligible in comparison with the total volume of transactions in the foreign exchange market.
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statements of politicians.At various meetings, summits, press conferences and so on are closely monitored in such statements online, and then the currency market immediately reacts depending on the strength of statements.
Everybody remembers the end of 2014, when Russian President Vladimir Putin one his performance immediately stabilized the ruble ("spoke Course"), thus halting its rapid decline.
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Central banking.The mechanism of its effects described below.
Central Bank
Consider how a currency exchange rate of the Central Bank.
Effect of the foreign exchange market through the Central Bank.As already noted, it is extremely rare situation where the State did not intervene in the foreign exchange operations (state of free navigation).As a rule, they occasionally affect the course of (the state of dirty swimming), thus affecting the way the exchange rate is formed by the Central Bank.
In the interest of the production and consumption of the state is carried out direct and indirect regulation.Direct regulation occurs at the discount policy and currency intervention.Indirect regulation through the inflation rate, the amount of money in circulation and more.
CBR
Next on how the exchange rate is formed by the CBR.
daily except weekends, Central Bank sets rates of most currencies against the ruble.The dollar against the ruble is determined based on how the bids were held on the eve of the Moscow Interbank Currency Exchange.The same applies to the euro.Other currencies are formed by cross-rates, ie the ratio between the ruble and other currencies, on the basis of the ratio of the dollar.
on how the exchange rate is formed CBR also affects imports and exports.If sold more goods than purchased, it would be better to fell the national currency, and vice versa.
The central bank sets the course of more than thirty types of currencies.This is the dollar, the euro, the yuan, the Swiss franc, the yen, the hryvnia, and others.
Since 2005, the Central Bank moved to the basket dollar-euro.It is believed that thus achieving a more flexible regulation and realized an increase in volatility.The course is calculated from the ratio in the Forex market the currency pair euro-dollar on the MICEX quotation of the ruble against the euro.
Banks
How is the exchange rate in the banks?Other banks have the right to set their own rates.They basically offer to buy the currency at a lower cost, and sell - more expensive than the price offered by the Central Bank.
MICEX
How is the exchange rate on MICEX - is also an interesting question.
Trading in foreign currencies at the Moscow Interbank Currency Exchange regulated by the Central Bank of the Russian Federation, which shall function on the basis of the federal law on public procurement, the federal law on currency regulation and control.
Forex
ignorant person is difficult to understand how a forex exchange rates.
on the international Forex market price is determined by the struggle of buyers (or bulls) and sellers (or bears).Individuals unable to influence the situation in this market.Only the International Monetary Fund and central banks can influence the dynamics of prices, and only in the short term.
Laws of explaining how the exchange rate is formed as follows:
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When the demand for foreign currency increases, so does its price, and when demand decreases, respectively, and the price is reduced.
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When the growing demand for currency, its value falls, and when the supply decreases, the price, on the contrary, increases.
