No point in buying dollars, Koltso Urala claims

8 July 2010 (09:01)

‘An economic surge is not very likely to happen in the second half of the year. The Central Banks are considering cutting back on the stimulus money packages, while investors are not as optimistic any more as they used to be in the beginning of the year. The ruble-strengthening stage is over, so the ruble is now fluctuating between its ups and downs. Given the unsolved economic problems, the euro will probably cost 1.22 EUR/USD on average, whereas the dollar might come to the ratio of 31.7 to 32 RUR per dollar. As for the euro, it looks relatively stable at 38.7 to 39 RUR per euro,’ says Koltso Urala Commercial Bank’s Currency Transactions Director Igor Nesterovitch.

‘Under the current circumstances, it is hardly a good idea to invest all one’s money in dollars. Given the difference in the interest rates the banks offer on ruble and foreign currency deposits, the ruble is not a bad alternative to foreign currency savings,’ he explains.

In the meantime, the Vlast magazine came up with its economic forecast for Russia and the world for the second half of 2010 recently. The magazine’s analysts believe the Central Bank focused on fortifying the ruble temporarily in the first six months of the year, which was justified by the relatively high oil prices and could be seen as anti-inflation by the Central Bank itself. Later on, when times grew hard for the euro on the global market, the dollar started going up steadily and the global oil prices dropped a bit, so it looked like a natural decision to stop supporting the ruble and to start supporting the dollar, the analysts claim.

The Central Bank now assures the public that the ruble exchange rate is going to go up and down all the time, so the bank’s official representatives declare that inflation targeting and the regulation-free ruble rate are necessary now. The ruble rate fluctuations will result in the dollar coming to cost more than 30 RUR per dollar by the end of the year, Vlast’s analysts feel.

As for the euro, its main threats are the currency speculators who might enjoy the ‘bear’ tactics and who feel the global economic recession is not over just yet.

‘In the second half of the year, things won’t look good for the euro, so it’s not likely to cost more than $1.27 by December,’ the analysts say.

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