26 December 2013, 19:00

What is in store for world currencies in 2014

What is in store for world currencies in 2014

The world currency market has lived through the outgoing year quite calmly. The new year promises moderate strengthening of commodity currencies, including the ruble. But experts have different opinions about the behavior of the main units of payment - the dollar and the euro. As for the new-fangled virtual currencies, which are rapidly gaining popularity, analysts predict that many of the so called cryptocurrencies may disappear.

Experts surveyed by the Bloomberg agency believe that during the first half of the year, the market will face an 8 percent growth of the American currency against the European. Probably, in the coming months, the dollar will be strong enough. No considerable weakening against commodity currencies, which include the Russian ruble, is expected, advisor to the Chairman of the Board of the YAR-Bank Mark Rubinstein says:

"The Federal Reserve starts to lower the quantitative easing program, that is, reduces the volume of printing money. This has a positive effect on the dollar. But the dollar, according to my estimates, seems quite expensive against the main global currencies. At the end of the first half of 2014, we can see the rouble at the level of 32.60-32.85 against the dollar. First of all, high prices for hydrocarbons will help the ruble, and also the ongoing slowdown of inflation and increase of economic growth will positively influence the ruble exchange rate. We will see acceleration in the second quarter."

As for the euro, according to most experts, this currency appears to be quite expensive against both the ruble and the dollar. Therefore, in the coming months, the somewhat overrated euro may become moderately cheaper. The euro is supported by the recovery of economic growth in Europe, so, significant fluctuations of the exchange rate of the euro against the dollar are not expected, Mark Rubinstein continues:

"The parity around 1.35 - 1.375 euro per one dollar will be preserved during the first half of the year, because there are factors pro and contra of the euro-dollar pair. And as for the ruble, I think that the ruble will slightly strengthen against the euro. Closer to the second quarter, the ruble may strengthen to the level of 44.40-44.80."

The Japanese yen is very likely to continue weakening in 2014, after the country's Central Bank weakened the national currency against the dollar by almost 25 percent in 2013. This way the financial authorities considerably increased the attractiveness of their export and "improved the health" of the leading corporations. But the problems of the Japanese economy have not diminished. Companies of the high technology sector still lose out to their competitors from South Korea; the GDP grows badly; and the government's debt has exceeded 10 trillion dollars - that is twice as much as the entire economy of Japan.

Tokyo will continue its policy of weakening its currency, because the economy supporting programs have, in fact, failed, head of the Department of Information and Analysis of the World Markets of the Finam investment company Mikhail Aristakesyan says:

"The notorious program "The Third Arrow", which implies significant reforms, is stalled. We do not see any significant progress. And until we see radical measures aimed at overcoming the current negative trends in the Japanese economy, the yen will continue to weaken. Within a year, it will probably reach the exchange-value of 110-115 yen against a dollar."

The continuation of the boom in the segment of virtual currencies is not excluded next year. The number of bitcoin's clones may come close to a hundred, some experts believe. Others suppose that those currencies, which have appeared more recently, will gradually fade from the market. Bitcoin's money supply is ten times greater than that of its competitors and it means that in the foreseeable future, nothing threatens its leadership in the segment of cryptocurrencies.

In 2014, the discussion about legislative regulation of this type of money will, for sure, continue. Cryptocurrencies and, first of all, the bitcoin often appear in the international criminal chronicle. In addition, the world's central banks are not interested in the growth of competition on the part of virtual money. They by all means continue to protect the population from risky investments, at the same time limiting the circulation of these currencies. For example, the Chinese Central Bank has acted this way: it forbade payment operators to service payments of online exchange houses trading bitcoins. By the way, after this statement, the rate of the cryptocurrency collapsed by 40 percent.

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