If there is the greatest mystery in the world, then the future of the only world currency is it. Let's start with the main thesis: no matter how convincing the numerous forecasts are, no one can really say what the dollar exchange rate will be for 2020. And to explain this fact, there are not only popular hypotheses from the category of conspiracy theories, but very specific theoretical evidence and market signals. However, no one bothers to study the most likely scenarios for the development of events. Let's try to consider both the theoretical base and work out one of the scenarios to form our own forecast for the dollar exchange rate.
Why the US dollar unpredictable in principle
The activities of any Central Bank should be extremely sudden and unexpected for all participants in financial markets. In this regard, the theory of financial analysis provides a lot of evidence, however, this truth is obvious even to an untrained researcher. After all, if the regulator will notify market players about their future actions in advance, then they will play against it.
For example, if the Central Bank declares that it is going to devalue the national currency, then you need to buy as many options as possible (in order to later pay off at a low price of the currency). And as a result of such co-directed actions of many participants in the financial market, the value of the national currency is jumping, and the Central Bank is forced to withstand this coordinated strategy, spending huge resources on it.
Central banks of all countries do this, but why is it impossible to make a forecast of the dollar exchange rate? Because the US dollar is the only world currency that everyone, without exception, is guided by. On FOREX there are 5 main tickers, and more than 70% of the total turnover is provided by 8 currency pairs. More than 43-45% of the turnover is in pairs, relative to the US dollar, plus all major currencies are also repelled in determining their value and are also quoted against the US dollar.
The American dollar is a countercyclical currency.
Countercyclical currency - a currency that traditionally demonstrates strengthening during periods of instability in world markets and / or recession in the global economy. This category of currencies includes, in particular, the US dollar, Japanese yen and Swiss franc.
The dollar is the strongest, most common, most recognizable world currency, which can serve as the universal equivalent of any good on the planet.
The tactical forecast (and the dollar exchange rate for 2020 is) is the most closely guarded secret "sealed" by the US Federal Reserve. The country's financial policy is developed in its depths and the Congress, the Senate and even the President have very limited access to its nuances. It's all about taxpayers' money: if a data leak occurs at some level, huge amounts of money will have to be spent to restore the situation.
In this case, dollar forecasts make up all and sundry. However, one should call a spade a spade: all this is nothing more than the assumption of this particular analyst, which has no more chances for implementation than the weather forecast for the coming week.
Probable scenario of the development of events
So what kind of dollar should we expect in 2020? What are the most powerful factors in this case that are likely to affect the exchange rate of the American currency?
In accordance with the forecasts of the majority of experts interviewed by TASS employees, the expected range of the ruble to dollar exchange rate in the middle of this year will be around 62-64 rubles. But the prospects for the second half of the year look worse for the Russian currency than the first. By the end of 2020, the dollar in the Russian market could gain as much as 66-70 rubles per dollar (of course, due to global economic events). However, such a forecast characterizes, rather, the ruble, not the dollar.
And within the framework of this analysis, it seems quite logical (and even scientific) to make other assumptions regarding the dollar exchange rate for 2020. What events related to the American economy, in the past and present, do we have?
- Donald Tramp started a trade war with China, raising duties on Chinese goods. (It is logical to assume a mirror course of the Chinese authorities).
- American Interest Rates treasures - Federal bonds - permanently reduced. (In this way, investment is stimulated precisely in the real sector, because an increasing number of industries are beginning to show greater returns than risk-free federal bonds).
- Continues to decline surplus trade balance. (In this regard, by the way, it is vital for Americans to promote their LNG on high margin EU market).
In addition, the European continent is changing trend regarding the vision of the future value of the euro: many EU member states wish the growth of the common currency. Countries-recipes subsidy policy of the European Union would like to see the dollar exchange rate for 2020 in relation to Euro rate at the level of 1,15-1,16 (where the European currency is, of course, more expensive).
All these factors unambiguously indicate that there is no alternative to further depreciation of the world currency relative to the present level. And that's why:
- This will give American exporters an advantage in international trade. In particular, with China and in the markets of third countries.
- An increase in exports with a lag of 1,5-2 years leads to an increase in investment in manufacturing, which is why the United States is extremely in demand amid past findings of high-tech industries in countries with cheap labor. That is, cheaper currency additionally stimulates domestic investment activity.
- And finally, a cheaper dollar will enable Americans to take away shares in the fundamentally important high-tech goods markets from German competitors.
Of course, this is not 100% accurate, but if you put together the most influential vectors of interests of the world's largest economic players (in particular, the interests of US corporations and EU countries), then everything indicates precisely the weakening of the dollar against all world currencies during 2020 of the year. So, this forecast has a logical justification.