International specialists forecast black future for US dollar in 2006

Russians purchased $39.052 billion during nine months of the current year

The rate of the US currency may hit the all-time minimum in 2006: the dollar may drop to 1.38 dollars per one euro, Citigroup analysts said. According to this forecast, the US dollar is likely to lose 20 percent of its value during the forthcoming year. If the forecast is true, such a considerable decline of the US currency may bring severe damage to Russian people's savings.

Citigroup experts believe that the rate in Europe may increase from the current two to 2.5 percent in 2006. The US rate may make up 4.5 percent by the end of the current year, although the index will most likely drop in 2006, Citigroup said. The GDP growth in the USA in 2006 will make up 3.3 percent in 2006, which will be lower than the level of the current year, the research from the international financial company said.

The majority of Russian specialists share the opinion of Citigroup experts. They say that the ongoing reduction of the euro value on the international market is not connected with the US economic progress, but has something to do with political problems in the European Union. Indeed, the euro rate decreased during the German elections and the French riots. Brushing those reasons aside, one may say that there are no significant reasons for the euro to slide in the future. The US Federal Reserve System increases its rate periodically, which makes US assets more attractive for investors.

Financial analyst Vladimir Detinich said that the euro would rise to the level of 1.3-1.5 dollars per one euro in the beginning of the next year. Vladimir Pantyushin, the chief economist of Renaissance Capital also believes that the US dollar will go down in 2006. However, the specialist thinks that Citigroup was too pessimistic in its forecast. The euro, Pantyushin said, will be traded within 1.27-1.30 dollars per euro next year, which is only 10 percent higher than the current level.

Other experts believe that the dollar value will rise if oil prices drop on the international level. In this case the dollar may reach the price of 1.15 and 1.10 dollars per euro. It is worthy of note that Brent oil lost 29 cents of its value on InterContinental Exchange Futures IСE Futures in London as of the end of the past week and set the minimum price level in five days.  The official price of IPE Brent Crude futures (January) made up 55.01 dollars per barrel according to the results of the tender. Experts say, however, that Brent oil cost lower than $55 per barrel a short while ago, on November 21. The majority of financial specialists say that oil prices will rise seriously: the price level on black gold will most likely be set on the level of $65 per barrel in 2006.

In the meantime, Russians continue to invest their savings in foreign currency, the US currency first and foremost. According to the Central Bank of Russia, the Russian population has purchased $39.052 billion during nine months of the current year, which is 67% more than in 2004. Despite numerous appeals from Russian officials to keep savings in rubles, the majority of people still prefer to save their money in US dollars. When the dollar was sliding speedily at the end of 2004, specialists recommended people to keep savings in dollars, euros and rubles to avoid unpleasant fluctuations.

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