Dollar Stabilization to Result in Ruble Collapse?

The markets seems to be indifferent to Yukos problems, it rather trusts in Alan Greenspan
Today the world markets have been patiently waiting for the first of two appearances of US Federal Reserve Chairman Alan Greenspan at the Congress. It was expected that if Greenspan at least dropped a hint about US economy growth, it would mean that the euro would decline. However, analysts admitted that the situation might be quite different as well and the euro would strengthen it position once again. 

Then Alan Greenspan finally appeared at the US Congress in the evening and said the Federal Reserve would further reduce the rate if it would give the US economy a boost.  Alan Greenspan is convinced that low rates will remain "as long as required" because economic growth is the main objective. The US Federal Reserve chairman says FOMC members are in agreement that no other methods will be effective to stimulate the economy. Alan Greenspan himself is seriously anxious about a real threat of deflation in the US; he is sure that economy will seriously suffer if prices drop.

Meanwhile, the dollar rate continues to increase in Russia, irrespective of any decisions taken by the US Federal Reserve. To tell the truth, the rate increase is insignificant, but still. Yesterday the rate increased by more than 3 kopecks to 30.53 rubles per dollar. However, as the demand for dollars is still very high on the market and the dollar proceeds are not compensated by exporters, it is obvious that the ruble-to-dollar rate stabilization was achieved thanks to interventions of the Central Bank of Russia. Experts say that the increased demand for dollars is obviously speculative. Market makers realize that weakening of the dollar is behind, and interest in the dollar has revived.

The turnover in the UTS on MICEX for "tomorrow" deals was about $400 million by noon yesterday. However, the RF Central Bank now holds considerable reserves to effectively curb the high demand for dollars; if necessary the Central Bank will use the reserves. Experts suppose that slow and gradual increase of the dollar-to-ruble rate is more probable.

Today the euro-to-dollar rate slightly increased on the world markets. The euro-to-ruble rate in Russia also slightly increased: bargains are concluded at the rate of 34.5 rubles (the official euro rate makes up 34.37 rubles, but analysts say it will increase soon).

The Russian currency market shows a strengthening of the dollar-to-ruble rate. The misbalance of the dollar and the euro is gradually coming to naught in the world against the background of macroeconomic tendencies in Europe and America. In the medium-term outlook the dollar is expected to regain its positions. The tendency is confirmed with the recently published reports on condition of the American economy.

Analysts say no considerable bounces of the ruble-to-dollar rate will be registered this week. It is highly likely that the dollar will stabilize at the level of 30.5 rubles per dollar and the euro will reach the level of 34.4-34.3 rubles per euro.

Analysts emphasize that complex situation on the market of shares has practically no influence on the currency market. The ruble rate has practically no connection with the recent corporative events. However, if the market seriously destabilizes because of scandals connected with Russian companies, the ruble will get much weaker.

Analysts say the general tendency of the market of shares is degressive; it is unlikely that progress will be registered there until the situation is vague. First, the market cannot increase because of the reduction of the ruble liquidity. When the dollar increased, the banks spent all spare rubles on purchase of the US currency; they had no money for shares and securities. Second, the reduction of oil prices registered in the world three months ago has finally reached Russia. The volume of currency proceeds of Russian exporters has reduced.

Analysts are sure that political news is loosing its influence upon condition of the market. That is why neither the dollar nor shares react to just another statement of the RF Prosecutor's Office. Experts are sure that a moment of stabilization has come.