A speculative mechanism which created the illusion of strength of the Russian currency, undermined and will probably be completely dismantled, says the economist Igor Nikolayev.
The depreciation of the Russian national currency to the psychologically important level of 70 rubles to the dollar to 80 rubles to the Euro raises questions about the reasons for this situation and the growing negative trends in the Russian economy. It is significant that the decline of the ruble against major world currencies against the background of sufficiently high oil prices. About the causes of the approaching global economic crisis, the observer of “Rosbalt” said the Director of the Institute of strategic analysis Igor Nikolaev.
— How do you explain the fact that the ruble passed the psychologically important milestones in relation to the dollar and the Euro?
— Just want to note that ahead of other “psychologically important levels”…
— Do you think that the ruble will fall further?
Yes. When you analyze the situation, you realize that this is the result of factors that already exist and will continue to impact on it in the near future. For this reason, grounds for optimism are few.
— What factors are you talking about?
— First of all, we are talking about the sanctions pressure. For investors becoming more evident that the most unpleasant for the Russian ruble, sanctions against sovereign debt will be introduced. Just as after the recent events it became known that a second package of sanctions related to the case Skrobala, after the publication of extra data, is also unlikely to be “for show”. Can be included very serious measures that will include, for example, restrictions on export-import.
But still, the most unpleasant for the ruble limitations are those that will address the sovereign debt of Russia. First of all, the ban on buying Russian government bonds, because until recently it was the main speculative mechanism for the maintenance of the ruble.
The scheme carry trade (carry trade — the strategy of gaining profit on the Forex market due to the difference in interest rates, — “Rosbalt“) worked just, including, and here in the market of Russian bonds. No wonder the share of non-residents on our market this spring, reached 34%. After the introduction in April, the us sanctions, it began to decrease and now is around 26% -27%, which is a serious reduction. The share of foreign investors will decline further.
Thus, the speculative mechanism which created the illusion of strength of the Russian currency, now tainted and will probably be dismantled if not completely, then ninety percent of the films this year. Investors understand this and this is a key factor in the devaluation of the ruble. Plus there are others. For example, the flight of investors from emerging markets that we are seeing not only in Russia but also in other countries. National currencies are falling in Turkey, South Africa, Argentina, India.
— What other factors are operating today on the ruble?
— The world economy as a whole is now on the eve of the crisis the cyclical nature. It seems that the trigger of this crisis was unwittingly found in the form of trade war, primarily between the US and China.
— Another fall of the ruble has occurred at a fairly high level of world oil prices. How do you explain this?
— Yes, oil prices are now really at a high enough level, but the ruble, they already do not save. No sooner had we rejoice that the ruble rid of oil, how did it fall…
In General, now there is a whole system of factors that determined the current trend, and the fracture of this trend not only in the short but even in the foreseeable future not yet seen, the ruble will continue to fall. In other words, the current problems, on the one hand, the indicator and stimulator of the development of the crisis phenomena in the Russian economy.
— You say that trigger a new global cyclical crisis can become a trade war between the US and China, but as I understand it, the US President Donald trump started them, not in order to promote the global crisis?
— No, of course! I think if you break out a new recession, we will certainly be those who will say that the Americans specially arranged for us to be bad. But it is obvious that trump is taking some measures against Chinese imports are not to deliberately hurt, and the best of intentions. In the spirit of its slogan “America first”.
Unfortunately, he does not think about the fact that the world economy is global that China is a worthy partner and can respond. We can not answer to the United States a mirror, and the Chinese economy comparable to the us. But things get worse for everyone.
The fact that the us economy is still growing is an illusion. For some time the Americans will still feel bad, but then, I believe, will be a clear slowdown.
— Back to our ruble. How much he can still fall against the major world currencies? We remember that in 2014 it saw on the scoreboard exchange rate of 100 rubles per Euro…
— I think that this year he is unlikely to fall to such values. My prediction: 80 rubles per dollar and 90 rubles per Euro. This is what we will see before the end of this year.
Like it or not, but in a market system the national currency is a good indicator of the state of the economy. If the exchange rate falls, it is extremely adversely affects the sentiments from both investors and consumers. Sociologists even during the crisis of 2008-2009 has drawn attention to the fact that Russian crisis is associated with a state of the ruble. The ruble is falling — there is a crisis. Conversely, the ruble is stable — then there is no crisis.
The modern economy — the economy of sentiment. If the national currency is falling, of course, entrepreneurial activity also stops. And this is further exacerbating the crisis…
— When, in your opinion, could start a full-fledged global crisis?
— I predict that the Russian economy following the year 2019 will be a minus. In 2017-2018, there was some illusion of small stature, but now we once again go into minus, 2019 and one year is not limited, because sanctions — a long time. And they are a key factor. Plus the instability in the oil market.
In addition, will begin a gradual retraction (the Russian economy) to the global economic crisis, which will begin is not, however, from 1 January 2019. Acute phase, in my opinion, will be in 2020-2021 years.
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