The US dollar depreciates record against major world currencies. The corresponding DXY index fell 0.35% and is trading near the minimum level since the end of August - 97 points. Such data are provided by the international exchange ICE.

The American currency fell in price on the global market after a meeting of top management of the Central Bank of the United States. The day before, the US Federal Reserve Open Market Committee reduced interest rates by 25 basis points for the third time in a row, to 1.5-1.75% per annum.

“The dollar has responded by weakening, which is happening constantly with the Fed cutting rates. Interest in issued dollars and dollar-denominated assets decreases due to a decrease in their profitability and the expectation of cheaper borrowed money, ”Ilya Grigoriev, debt market analyst at Ivolga Capital, explained in an interview with RT.

Analysts attribute the decline in interest rates in the US to a record slowdown in the US economy. According to the United States Bureau of Economic Analysis, in the third quarter, the country's GDP growth was 1.9%. The value has become minimal since the beginning of 2017. Reducing the rate should reduce the cost of loans for businesses, increase investment and thereby support the country's economy.

“The US position has been seriously weakened by the trade war with China. Therefore, the Fed, in order to stimulate economic growth, has already reduced the base rate for the third time since July, ”said Andrei Lyushin, Deputy Chairman of the Board of CB LOCO-Bank, in an interview with RT.

As a result of the intensification of the trade war with China, the US economy may face a recession in the second half of 2020. This is stated in a recent study by the American University of Duke. Earlier, GDP growth was actively supported by Trump's tax reform. But now the country's economy has fewer incentives. About this in an interview with RT said portfolio manager QBF Denis Ikonnikov .

“Since the beginning of 2019, the tax reform factor has exhausted itself, the profit of American corporations is already growing at a double-digit pace. Back in 2018, each quarter, indicators on average grew by 20% compared to 2017 levels. Now the average growth rate does not exceed 10%, ”said Ikonnikov.

Although the Fed interest rate cut should support the US economy in the face of the threat of recession, the policy of the regulator reduces the attractiveness of the dollar for investors. Therefore, participants in the global financial market are beginning to actively buy currencies and securities of those countries where high interest rates are set. Thus, players can get increased return on investment.

The results of the Fed meeting and the global weakening of the dollar had a positive effect on the Russian stock market and national currency. At the opening of trading on October 31, the Mosbirzhi index rose by 0.8% and for the first time since the observation reached 2936 points. At the same time, the dollar depreciated by 0.2%, to 63.7 rubles.

According to experts interviewed by RT, the Russian national currency has a chance to further strengthen against the dollar by the end of the year. It is expected that in the coming months the Fed will reduce the base rate and thereby additionally put pressure on the US currency.

“It is worth noting that Donald Trump has put serious pressure on the head of the Federal Reserve Jerome Powell. As the American president has repeatedly stated before, stimulating the economy and business can only bring the rate to zero or negative, ”said Andrey Lyushin.

According to Denis Ikonnikov’s assessment, in addition to the global weakening of the dollar, the rise in oil prices may also provide some support to the ruble. At the same time, the influence of this factor on the Russian currency will be limited by the budget rule, which stipulates that during the growth of commodity quotes, the Ministry of Finance buys foreign currency and thereby puts pressure on the ruble. In the event of a collapse in the energy market, the ministry ceases operations - and pressure on the ruble weakens. As a result of such actions, the dependence of the national currency on oil is reduced.

  • US President Donald Trump
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“Although the ruble has been largely untied with oil prices, a small dependence is still preserved. In many ways, the further dynamics of commodity quotes will be determined by decisions on the OPEC + deal, ”Ikonnikov believes.

According to the expert, the record growth of the Russian government debt market will also play in favor of the ruble. To date, the government bond index (RGBI) is trading near a historic high of 150 points.

Denis Ikonnikov predicted that until the end of the year and with today's conditions remaining, the dollar will continue to remain in the range of 63–65 rubles.