Forecasts: how will the dollar rate change in 2019?
Few analysts risk predicting how the dollar will change in 2019. Too many “unknowns” in this equation. Problems have plagued the United States since 2018. “Trade wars”, the shutdown, the investigation into the case of interference in the American elections – all these troubles are a serious threat to the main world currency. The first important event this year has already affected the value of the USD. Let us talk in more detail about how the world responded to the first FRS meeting in 2019.
How the dollar rate will change in 2019: the market reaction to the FRS meeting
In February, positive sentiment prevailed on the Moscow Stock Exchange. After the first meeting of the US Central Bank in 2019, the dollar dropped to the level of 65.2 rubles. The reason for this was the statement by the head of the FRS Jerome Powell that it was necessary to take a pause in tightening financial policy. Russian investors have responded positively to this information and, according to experts, will soon begin to sell the dollar.
The official rate of the Central Bank of the Russian Federation was 65.35 rubles per dollar. The cost of the euro amounted to 75.2 rubles. The main reason for the fall of the US currency was the rise in the price of risky assets due to the FRS statement. Trading on the Chinese stock exchanges also ended positively, the SSE Composite index showed an increase of 0.35%. So, what happened at the FRS meeting? First, it was decided to leave the key rate at the level of 2.25-2.5% per annum. Moreover, the head of the department, Jerome Powell, believes that now there are no weighty arguments in favor of the subsequent tightening.
The crisis in 2008 forced the FRS to take unprecedented measures to lower the key rate to 0-0.25% per annum. At this step, the Central Bank of the United States went to stimulate economic growth during a recession. Accordingly, crediting received record low rates, the population began to consume more, investors returned to the States. However, in 2015, the FRS began to raise the key rate. Experts note that such measures are applied to prevent overheating of the economy.
In 2018, the US Central Bank raised its key rate four times, due to which the dollar rose substantially. However, now it is time to slow down somewhat. QBF expert Huseyn Abdullayev believes that the main signal for this was the fall of the dollar in October and December.
Experts believe that this year the key rate will not grow. Therefore, investors are expected to give up dollar assets. They will start gradually sell them by investing in securities of developing countries. Negative market sentiment towards the dollar has already manifested itself in a decline in its value. The DXY index before Powell’s performance is at the level of 96 points, and after it dropped to 95.2 points. According to Huseyn Abdullayev, this trend will continue further. The expert expects a further decline in DXY, which will eventually reach 94 points. In combination with other events that put pressure on the US economy, all this will lead to a decrease in the value of the American currency.
