Analysts optimistic about consequences of dollar fall

Analysts from Aton Capital commented on the situation on the domestic stock market and forecasted that the RTS composite index would be more bullish than that of shares traded on MICEX. They stated that the dollar exchange rate had dropped sharply against the euro and noted that foreign investors working on the Russian stock market preferred the RTS exchange. As a result of the dollar fall, prices for domestic stocks, recalculated in euros, dropped by 10 percent on average. Foreign investors are bound to start buying domestic shares, whose prices went down unfairly.

Experts linked the weakening of the US currency to uncertainly around economic development that would appear when military operations started in Iraq. Theoretically, the Iraqi crisis could provoke a default in US foreign debts, due to the high volume of debts and increasing payments after a fall in the dollar rate against the majority of other currencies. A rise in state expenditures would results in a heavier tax burden for industrial enterprises, which, in turn, will have a negative impact on industrial growth. Aton specialists predicted that the Russian stock market would not suffer noticeably from these economic problems.

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Author`s name Editorial Team