Exchange rate– price expression monetary unit one country in the currency of another.
Establishing an exchange rate by valuing a foreign currency unit in national currency is called direct quotation. The reverse quotation represents the price of the national currency in foreign currency (1 ruble = 0.035 US dollars).
Classification of exchange rate types:
I. By type of transaction:
a ) urgent- used when concluding futures currency contracts;
b) SPOT rate is the current short-term exchange rate.
II. For inflation:
a) nominal – exchange rate currencies currently operating in the country's foreign exchange market;
b) real- is calculated as the ratio of the prices of goods of the two countries, taken in the corresponding currency.
III. In relation to the participants in the transaction:
a) course purchases;
b) course sales.
IV. Selling method:
a) course cash sales;
b) course cashless sales.
V. According to the method of establishment:
a ) official;
b) informal(market).
According to the IMF classification, a country can choose the following modes exchange rates :
1) Fixed . The exchange rate of the national currency is fixed in relation to one voluntarily chosen currency and automatically changes in the same proportions as the base rate; or fixed to the SDR; or a "basket" exchange rate is set. In this case, the exchange rate of the national currency is tied to a currency combination that includes the currencies of the country's main trading partners.
2) free floating . As a rule, it does not occur in its pure form, since the Central Banks carry out foreign exchange interventions in order to prevent sharp significant fluctuations in the exchange rate of the national currency.
3) Mixed . This is the so-called group swimming, when countries unite in a common monetary union and establish two exchange rate regimes: internal - for operations within the union; external - for operations with other countries. For example, OPEC countries have tied their rates to oil prices.
The factors influencing the value of the exchange rate are divided into structural (acting in the long term) and market factors (causing short-term fluctuations in the exchange rate).
To structural factors relate:
State of the country's balance of payments;
Purchasing power of monetary units and dark inflation;
Difference interest rates in various countries;
State regulation exchange rate;
The degree of openness of the economy.
market factors related to fluctuations in business activity in the country, the political situation, rumors and forecasts, such as:
· Demand and supply in the foreign exchange market;
crises, wars, natural disasters;
· Forecasts and expectations of foreign exchange market participants;
the cyclicality of business activity in the country.
Let us consider in more detail the mechanism of influence of the main factors on the value of the exchange rate.
The basis of the modern exchange rate, as the price of a monetary unit in foreign means of payment, forms a whole complex of exchange rate factors that manifest themselves through the supply and demand of this currency in the market.
The multifactor nature of the exchange rate reflects its relationship with other economic categories: cost, price, money, interest, balance of payments, scale of capital migration, etc. There is a complex interweaving of these phenomena, and as a decisive one, then another factor is put forward.
Among rate-forming currency factors the following can be distinguished.
1. The rate of inflation. The higher the rate of inflation in a country, the lower the rate of its currency, unless other factors counteract. The inflationary provision of money in the country causes a decrease in purchasing power and a tendency for their exchange rate to fall against the currencies of countries where the inflation rate is lower. This trend is usually observed in the medium and long term, and the equalization of the exchange rate, i.e. Bringing it into line with purchasing power parity takes an average of 2 years. This is due to the lack of daily adjustment of the exchange rate quotation according to their purchasing power, in addition, there are other exchange rate factors.
The dependence of the exchange rate on the rate of inflation is especially high in countries with a large volume of international exchange of goods, services and capital. This is explained by the fact that the closest relationship between changes in the exchange rate and the relative rate of inflation appears when the exchange rate is calculated on the basis of export prices.
2. State of the balance of payments. An active balance of payments contributes to the appreciation of the national currency, because. it increases the demand from foreign debtors. A passive balance of payments leads to a depreciation of the national currency, because. debtors sell it for foreign currency to pay off your debt. Instability of the balance of payments, the impact of the movement international capitals on the balance of payments - all this leads to a change in supply and demand for the respective currencies.
3. Interest rate difference in different countries. The influence of this factor on the exchange rate is due to two reasons:
First, the change in interest rates in the country affects, ceteris paribus, the international movement of capital, and, above all, short-term capital, because. an increase in interest rates stimulates an inflow of capital, while a decrease stimulates an outflow of capital, incl. national, abroad. And the movement of capital, especially "hot money", increases the instability of the balance of payments.
Secondly, interest rates affect the operations of foreign exchange markets and RSKs.
4. Speculative currency operations and activity of foreign exchange markets. If the exchange rate of any currency tends to fall, then it is sold in advance for more stable currencies, which further worsens the stability of the currency. Currency markets respond to fluctuations in exchange rates, thereby expanding the possibilities for currency speculation and the movement of "hot money".
5. The degree of confidence in the currency on the national and world markets, which is determined by the state of the economy and the political situation in the country.
6. State regulation of the exchange rate. The ratio of market and state regulation of the exchange rate affects its dynamics. The formation of the exchange rate through the mechanism of supply and demand in the foreign exchange markets is accompanied by a sharp fluctuation in exchange rates. The market develops a real exchange rate, which is an indicator of the state of the economy, money circulation, finance, credit and the degree of confidence in a particular currency. State regulation of the exchange rate consists in devaluation or revaluation.
Thus, the formation of the exchange rate is a multifactorial process, which is due to the interconnection of the national and world markets, national and world economies and politics. Therefore, when forecasting the exchange rate, all exchange rate factors and their influence on the ratio of currencies, depending on the specific situation, are taken into account.
In the conditions of inexchangeable credit money the mechanism of functioning of the exchange rate is undergoing significant changes. Credit money, unlike gold, has no intrinsic value, it has only a representative value, which determines its exchange value or purchasing power. The purchasing power of the currency in relation to goods on the domestic market is the basis of the exchange of currencies in the conditions of paper money circulation, therefore, the cost basis of the exchange rate is the purchasing power parity, which is constantly decreasing, because. credit money is subject to depreciation. Depreciation in different countries is uneven, and purchasing power parity is constantly changing, and the basis of the exchange rate in terms of paper money circulation becomes unstable. The exchange rate fluctuates around its volatile basis based on the supply and demand of the currency. And if under the gold standard these fluctuations had clear boundaries, then under these conditions there are no definite boundaries for fluctuations in exchange rates. Under the conditions of paper money circulation, there is no free movement of gold within the country and in international circulation, therefore, participants in international circulation are deprived of the opportunity to choose the means to pay off their debt to foreign partners. They can only pay in foreign currency, which essentially lowers the margin for exchange rate fluctuations around parity.
U.S. dollar is the official currency of the United States of America. Bank code - USD. Denoted by the $ sign. 1 dollar equals 100 cents. Denominations of banknotes in circulation: 100, 50, 20, 10, 5, 2 (a relatively rare banknote), 1 dollar, as well as coins of 1 dollar, 50, 25, 10, 5 and 1 cent. In addition, there are banknotes in denominations of 500, 1,000, 5,000, 10,000 and 100,000, which were previously used for mutual settlements within the Federal Reserve System, but have not been issued since 1945, and since 1969 have been officially withdrawn from circulation, since they were replaced electronic system payments. The name of the monetary unit, according to the most common version, comes from the medieval coin thaler, minted in Germany.
Traditionally, the obverse side of the US dollar depicts the presidents and politicians of the United States. On the modern banknotes these are Benjamin Franklin - $100, Ulysses Grant - 50, Andrew Jackson - 20, Alexander Hamilton - 10, Abraham Lincoln - 5, Thomas Jefferson - 2 and George Washington - $1. The reverse side depicts historical monuments: 100 dollars - Independence Hall, where the Declaration of Independence was signed, 50 - the Capitol, 20 - the White House, 10 - the US Treasury, 5 - the Lincoln Memorial in Washington. The $1 note has a special design on the back, consisting of a double-sided image of the so-called Great Seal of the United States, used to authenticate government-issued documents and held in Washington.
It is believed that in order to counteract the printing of counterfeit dollars, the design must be changed at least once every 7-10 years. At the same time, absolutely all US banknotes issued since 1861, when money was first issued in paper form, are legal tender in the United States.
For the first time, the decision to issue US dollars was made by Congress in 1786, and in 1792 they became the main settlement currency of the state. Since 1796, the principle of a bimetallic monetary unit has been introduced, that is, both silver and gold coins were minted. At the same time, each time, as a result of a change in the ratio of prices for two precious metals, either one or the other coins disappeared from circulation. Until 1857, foreign money (primarily Spanish pesos and later Mexican dollars) also served as legal tender in the United States.
In 1900, the gold standard was passed. At this point, 1 dollar corresponded to 1.50463 grams of pure gold. In 1933, it was devalued by 41% for the first time as a result of the Great Depression. A troy ounce of gold was worth $35.
At the end of World War II, as a result of the Bretton Woods agreement, the dollar became the only monetary unit that was exchanged for gold, while the rates of other world currencies were tied to the US. At the same time, in the post-war years, the United States became Europe's main creditor. Thus, the US dollar became the world's accounting currency and took its place in the reserves of central banks.
However, by 1960, the chronic deficit of the US budget led to the fact that the amount of dollars owned by creditors around the world exceeded the size of the gold reserve. The crisis of 1969-70 complicated the situation. As a result, in 1971, the exchange of dollars for gold was finally terminated after a corresponding statement by President Richard Nixon.
During the 1970s, the dollar depreciated. The situation was aggravated by the crisis of 1975-76. In 1976, as a result of an international agreement, a new one was created - the Jamaican monetary system, which finally legalized the rejection of the gold backing of currencies.
The strengthening of the dollar in the 1980s put US manufacturers at a disadvantage relative to other countries. As a result, it was decided to devalue the dollar by cutting interest rates. And by 1991, the exchange rate had actually been halved against the Japanese yen, the pound, and the German mark.
In 1992, as a result of the fall of the British pound and the crisis in Europe, the dollar rose by almost 30%, but from April 1993 its quotes began to decline again - until 1998, when there was a significant weakening of the dollar against the Japanese yen - from 136 up to 111 within three days. This was due to the massive repatriation of funds from Japanese investors as a result of the market crisis. developing countries, including default in Russia.
1999-2001 - a period of new strengthening of the US dollar, which was stopped by the Federal Reserve, which lowered interest rates to 2% in order to stimulate the economy.
The most important event for the dollar was the creation in 1999 of a single European currency, in which central banks many countries - creditors to the United States transferred part of their reserves.
For the summer of 2011, the US dollar is quoted in the range of 1.40-1.46 dollars per euro, 76-78 Japanese yen per dollar and 1.62-64 dollars per pound.
Despite competition from the euro, today the United States currency occupies a leading position in the reserves of central banks. In addition, it remains the main settlement currency between countries in international trade, and is also the base for settlements through payment systems by plastic cards out of zone European Union where the euro dominates.
US dollar is the main currency Forex market. Transactions are carried out through this currency and the main quotes are set.
Experts' opinions regarding the future dollar are diametrically opposed. On the one hand, many believe that in the near future the collapse of the dollar financial system inevitable due to the huge external debt United States, the largest in the world. For the summer of 2011, it exceeds $14.5 trillion.
On the other hand, the stability of the dollar is based on high economic indicators. The US economy ranks first in terms of gross domestic product, outpacing China, which is in second place, by almost two to one. In addition, the high exchange rate of the dollar contributes monetary policy of the Federal Reserve System, as well as the faith of investors who keep their assets in US currency and during crises seek to convert them into dollars, finding refuge in US debt instruments from the elements of a market economy.
What does the exchange rate depend on? It is impossible to answer this question unambiguously, but the fact that it is determined by the market is an axiom. And yet, what factors influence changes in currency quotes? There are several. First of all, this is the ratio of imports and exports. It's very simple, if the price of a product on the domestic market is much higher than on the external market, then this will lead to an increase in imports and, accordingly, to a decrease in exports. This fact is called "purchasing power parity" of the exchange rate. What is meant by this concept? This is an indicator that shows how the ratio of prices for goods in the domestic and foreign markets of two countries affects the ratio of their currencies. We can say that currency changes are directly proportional to price changes. This is visible on simple example. If one of the countries increases imports, then the price of foreign currency also rises.
And one more important factor. An increase in imports always precedes an increase in national income. In turn, with its increase, the price of the national currency falls. A similar situation is observed in financial market. The greater the contribution of investors to the shares of foreign companies, the higher the price of foreign currency.
If one of the countries pays for the services of another state, then its currency grows in value. Speculative operations of traders in the foreign exchange market are based on this factor. As soon as the currency falls in price, they try to get rid of it. Mass ejection Money the market provokes an even greater fall in prices. In addition, the fall in the exchange rate is due to news. They can be directly related to politics, natural disasters, financial shocks, etc. All this leads to a sharp movement of capital in one direction, which in turn leads to a sharp change in the exchange rate.
This kind of movement may not be due to the news itself, but to their expectation. An example is the expectation of the publication of economic indicators of those countries whose currency is represented on the foreign exchange market. Also, a sharp jump in the currency may be due to changes in the interest rate, which is sometimes used by market regulators.
All new economic indicators are published in the economic calendar, the date of which is known in advance. It is quite clear that the market is also preparing for such an event, reacting to it with changes in exchange rates. Traders prefer to wait out this period and not enter the market, as it is quite difficult to predict its behavior at this moment. However, there is a special trading strategy called “news trading”. Based on it, you can build forecasts that allow you to determine the direction of the trend and make appropriate adjustments to it.
For example, we expect the course US dollar will start to grow. This will happen in a month, but you need to buy the dollar now. After the release of the news and the correction of the trend, the dollar can be sold, earning on the difference in currencies.
In addition to the above factors, the movement of the exchange rate is influenced by the activities of investment and insurance funds. With huge amounts of money, they can invest in currency, which leads to a sharp change in the exchange rate. In this case, it is important for a trader to anticipate events and open a position in time in the direction of the trend.
Once again, we draw your attention to the fact that significant changes in the foreign exchange market can be caused by: statements by politicians, the activities of importers and exporters, various kinds of forecasts and even rumors, the actions of central banks carrying out foreign exchange interventions, inflation, bank mergers, devaluation of the national currency. What is important for a trader is to understand the essence of what is happening and, on the basis of this, make correct forecasts that allow successful trading.
International relations are based on the use of national currencies. These include various means of circulation: coins, banknotes, payment documents, securities, precious metals, etc. Depending on the level of integration of the country into world economy, the currency can turn around in different ways. The exchange of a national unit is a prerequisite for international trade.
The exchange rate is the value of the country's currency, expressed in payment signs of another state. It connects the economy with the outside world, allows for international transactions.
The ability of citizens of the country and non-residents to freely buy and sell banknotes called convertibility. Any restrictions on such operations by the Central Bank or the state turn the currency into a partially negotiable one. Free conversion is possible only in an economically stable country. Legislative permission alone is not enough, it is also necessary to have confidence in the monetary unit and a high assessment of the level of development of the state.
The conversion is based on currency parity. But in practice, the rates of monetary units never coincide with it, since supply and demand are not equal. In conditions of an active balance of payments, the foreign exchange rate domestic market is falling, while the national one is growing. The reverse situation occurs with a passive balance. Therefore, in most countries at the same time there is an official and free exchange rate. According to the first, the Central Bank settles with international organizations, and according to the second - between individuals.
Quotation - fixing the national currency in a foreign one. They are of two types: direct (for example, the price of a dollar in the domestic market) and reverse. If the value of one currency is expressed in terms of two others, then this is a cross rate. The need for it arises if the exchange of direct quotes between two monetary units is very small.
The demand for a currency is determined by the interest of other countries in domestic goods. To pay for a purchase, foreign states should carry out a currency exchange.
The offer is determined by:
1) the demand of a given country for foreign goods;
2) interests in financial assets other states.
The price changes every day under the influence of various macroeconomic factors. The Central Bank of the Russian Federation publishes rates daily in special bulletins. The basis for these calculations are:
1. Quotes of the last exchange business day for transactions "US dollar - Russian ruble".
2. official rate currency set by the IMF on the previous business day.
3. Prices for other currencies are calculated by the Bank of Russia on the basis of their quotations against the dollar in the international, exchange segments of the domestic market, as well as the levels established by the Central Bank of the respective states.
In the days of the gold standard, purchasing power parity was determined by the content of the precious metal in monetary units, and the price fluctuated within 1%, i.e., the cost of transporting coins. In the conditions of paper circulation, it changes daily, so it became necessary to study the laws of its fluctuation. The price is formed under the influence of supply and demand.
A change in the exchange rate affects the state of foreign trade, is reflected in the result of the activities of organizations, the level of employment, etc. Therefore, state intervention in such relations is necessary. But its intensity depends on the goals and the set of economic levers. Actions can be aimed both at reducing (devaluation) the value of the national currency, and at its increase (revaluation).
The exchange rate may change under the influence of the country's balance of payments - the ratio of received and paid amounts. A surplus indicates an increase in demand for a currency from foreign borrowers, thus strengthening it. Passive is an increase in interest in foreign currency, a depreciation of the national one.
Changing consumer tastes. An increase in demand for imported services will lead to a decrease in the price of the national currency. And increasing interest in domestic services will contribute to the growth of its cost.
State policy in foreign trade. The exchange rate will increase if imports are restricted by the state. But the widespread use of such measures can have negative consequences, as the volume of international trade will be greatly reduced.
Change in the amount of income of buyers. With the growth of the number of temporarily free funds increases the consumption of goods (imported and domestic), the demand for foreign currency. In the market, this will be reflected in a depreciation.
Inflation. Other things being equal, this process is inversely proportional to the exchange rate. If prices in one country rise faster than in another, then imported goods will cost less than domestic ones. Accordingly, the value of the national currency will decrease. people's desire to keep real income by buying foreign currency will only exacerbate the situation. But, since the supply of the currency remains unchanged, inflation will lead to a depreciation. Therefore, it is customary to calculate purchasing power parity (PPP). This is the real price of the ruble, expressed in the monetary unit of another state. The calculation is carried out for similar products. Example: consumer basket in Russia it is 7000 rubles, and in the USA - 100 dollars. The ratio of rates will look like: 1 dollar = 70 rubles, or 1 rub. = $0.01.
The value of real interest rates: the higher they are, the more attractive this country for investment investments. But, on the other hand, their growth causes an increase in the cost of credit. If entrepreneurs do not have enough own funds to finance economic activity, then the borrowed capital received high stakes will lead to an increase in costs, an increase in the price of products and a decrease in the attractiveness of the national currency. That is, this factor can have a dual effect on the dollar exchange rate.
State regulation of the economy: the use of foreign exchange reserves, trade, financial and monetary policy.
Other factors affecting the exchange rate:
1. Publication of important economic data in the media: inflation rates, balance of payments deficit, unemployment rate, discount rates, stock indices, stock prices, bonds, GNP, election race, etc.
2. Large transactions of commercial financial organizations.
3. Exchange rate factors, the impact of which cannot be predicted (we are talking about wars, revolutions and other cataclysms).
4. The Central Bank can have a direct impact on the exchange rate by buying or lending currency in large quantities. This causes sharp fluctuations in the ratio. Regulation of interest rates and volume money supply does not affect the value of the ruble so much.
5. Insurance, hedge, pension and other funds invest in currencies in an attempt to avoid devaluation risks. Such transactions - especially with large amounts - significantly affect the country's exchange rate.
6. The cost of gold and oil.
Foreign exchange interventions - operations of the Central Bank for the purchase and sale of the country's monetary unit. To increase the course central bank must sell foreign currencies, thus reducing the demand for them. And to lower - perform the opposite operation.
Discount policy is a change in the discount rate that affects the price of a loan in the domestic market. With a passive balance of payments, its growth can serve as an incentive for capital inflows. By reducing the rate, the Central Bank is counting on an outflow of funds that will reduce the surplus and lower the exchange rate.
These include:
A blockade is a sanction in the form of unilateral restrictions by one state or a group of countries of another power that will not allow the use of its banknotes;
Prohibition on the free circulation of foreign currency;
Regulation of international transactions;
The movement of capital, gold, the Central Bank;
Repatriation of profits;
The concentration of foreign currency in the hands of the state.
There are several classifications. By time:
1) spot - the exchange rate, which is held for no more than 2 business days after the quote is accepted;
2) forward - the future value of the national currency, expressed in foreign.
Types of exchange rates that are used to identify real movement trends:
1) nominal - current quotation;
2) real - this is the recalculated cost of the monetary unit, taking into account inflation;
3) nominal effective - the ratio of the national currency and the currencies of the partner countries;
4) real effective exchange rate - nominal, calculated adjusted for price dynamics.
According to the degree of hardness:
1) fixed - a clear price ratio;
2) limited flexibility - can vary within certain limits;
3) floating - established on the basis of supply and demand.
There are also hybrid types: controlled floating, creeping fixation and a currency corridor - these are the limits for price fluctuations that are set by the Central Bank. His main feature lies in the fact that the limit ratios are strictly limited and fixed by law. The currency corridor is introduced in the absence of free capital, due to a large deficit, internal and external debt.
"Currency" in translation means "value". Let's take an example. Even 100 years ago, the value of money was determined by the amount of gold reserves that the state had. But after the Second World War, most of the precious metal was concentrated in the United States. Then there was a transition to the gold exchange (Bratton Woods) system, according to which:
Then the monetary unit of the richest country in the world (USA) replaced gold in international settlements. But after the rate of production growth in Japan overtook the American one, the European Economic Community was formed (1954), which included France, Germany, Italy, Belgium, the Netherlands and Luxembourg. The competitiveness of goods from the United States has declined sharply. Countries in which dollars were in large quantities began to present them to the treasury in order to exchange them for gold. And after the stocks of the precious metal ran out, the US devalued the currency. On March 19, 1973, a new system was introduced.
The fixed exchange rate is set and maintained by the intervention of the Central Bank at a certain level. Consider this on the example of the ratio of pounds sterling to the dollar. If the demand for the British currency grows, then its rate rises. The task of the Central Bank is to clearly fix it at a certain level. To do this, the bank must buy foreign currency. As a result of increased demand for imported goods, the dollar value of the pound is declining. The Central Bank should reduce the availability of the national currency by exchanging dollars for it.
As the exchange rate rises, foreign exchange reserves decrease. Demand for goods leads to an increase in exports, that is, an influx of foreign currency. This causes a surplus in the balance of payments. In such a situation, the Central Bank should increase the supply of the national currency by buying foreign. This will lead to the replenishment of the country's monetary reserves.
Due to the growth of imports, the exchange rate decreases, there is an outflow of capital from the country, the balance becomes negative, and there is a deficit. In order to finance it, it is necessary to reduce the supply of the national currency by buying it.
At a fixed exchange rate, the balance of payments looks like:
Current operations (Xn) + Capital flow (CF) = Change in reserves (R).
A fixed exchange rate, which is accompanied by a chronic surplus or deficit in the balance of payments, can cause a lot of problems. In the first case, there is a possibility of excessive accumulation of reserves, which can lead to inflation. In the second - there is a threat of depletion of foreign exchange reserves. In any of these situations, the Central Bank will be forced to officially change the price of the monetary unit, that is, to cause a revaluation or devaluation.
Floating exchange rate regulated market mechanism A: supply and demand in the market, without government intervention. Payment balance looks like:
In such a situation, the deficit, that is, low demand for domestic goods, is financed by an inflow of funds. A depreciation is called a depreciation. This makes domestic goods cheaper and promotes the development of exports. The surplus is financed by the outflow of funds. If domestic goods are in great demand, the interest of foreign investors grows along with the exchange rate of the national currency. This situation is called a rise in price. Foreigners buy banknotes of this country. This reduces exports, stimulating imports and depressing the national exchange rate.
The current system cannot be called completely flexible. The US Federal Reserve and European Central Banks do not allow the dollar to fluctuate freely in order to prevent a sharp fall (as in 1985). Therefore, they buy it, artificially increasing demand and maintaining a higher rate.
In the Russian Federation, the currency corridor first appeared on June 8, 1995. Since 1996, a sliding peg of the ruble to the dollar has appeared. Such a system is called a sloping currency corridor. The price change depended on the forecast inflation rates with small deviations. Since 2008, a dual-currency corridor began to operate, which was adhered to by the reserves of the Central Bank.
The value of the ruble in the national currencies of other countries largely depends on the volume of exports.
Course correlation Russian currency with USD and EUR
In 2008-2009 against the backdrop of a decrease in exports, the ruble strengthened, although the correlation dependence is quite high. This indicates the weakness of world reserve currencies. The figure -0.78 shows that the appreciation of the national currency is taking place against the backdrop of a decrease in the volume of deliveries of goods to other countries. In the period 2010-2011. the exchange rate of the ruble fell against the backdrop of the country's recovery from the crisis and the growth of exports. In 2012-2013 National currency strengthened against the dollar and the euro, there was a direct dependence.
In April 2014, the ruble hit a historical high against the dollar (1:50) and then dropped sharply (to 36). While fluctuations are commonplace in floating-price countries, the changes that took place last year were difficult to predict.
The Central Bank for a long time did not dare to raise the key rate, on the basis of which the refinancing takes place banking system. In recent months, the Bank of Russia has “sponsored” CBs in the amount of 5 trillion rubles. The main source of such investments is loans secured by the Central Bank and non-market assets. With the weakening of the ruble exchange rate, free cash resources of the CB were directed to currency market. Today it is more profitable to carry out speculative operations than to invest in the economy. To avoid such situations, European Central Banks have raised discount rates since last year. The Bank of Russia, on the one hand, limited the inflow of capital to 5.5%, and on the other hand, it restrained the devaluation of the ruble at the expense of the gold and foreign exchange reserve. And only in March 2014 raised the discount rate to 7%. This decision was caused by the need to raise the metallurgy and mining industry. They have become practically unprofitable. The only way to remedy the situation is to weaken the ruble against the dollar.
The exchange rate reflects the value of the national currency through a foreign one. It should be regulated by the state and the Central Bank. If a clear ratio is established, then this is a fixed rate. If the price fluctuates depending on supply and demand - floating. These exchange rate regimes maintain a certain price ratio.
