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What to expect from U.S dollar in 2019? Forecasts of experts

World experts predict that the U.S. dollar’s ​​position may weaken internationally in 2019. However, this will not bring Kyrgyzstan a strengthening of som to the U.S. currency. On the contrary, the dollar will a little rise in price in our country under the influence of sanctions against Russia.

24.kg news agency compiled forecasts for the dollar exchange rate for 2019 by domestic, Russian and foreign analysts.

Will the dollar weaken?

Analyst of the Economic Analysis Department at the Eurasian Development Bank Aigul Berdigulova noted that the dynamics of the exchange rate in 2019 would follow the path of gradual weakening under the influence of fundamental factors.

EDB economists predict that the average dollar exchange rate in 2019 will be 69 soms, and in 2020 — 69.7 soms.

«The National Bank of Kyrgyzstan does not make forecasts for the dollar. We can only say what factors are capable of influencing the dynamics of exchange rates,» the head of the National Bank of the Kyrgyz Republic Tolkunbek Abdygulov said to 24.kg news agency.

According to him, internal and external factors traditionally influence the stability of the national currency. The internal ones include the stability of the economy, state finances and the payment of external debts.

Sometimes it seems ridiculous, but the exchange rate depends on the climate conditions — severity of winter, amount of precipitations, crops harvest.

Tolkunbek Abdygulov

«In addition, the expectations of the population always influence the monetary policy of the National Bank. In any case, the volume of international reserves allows the National Bank and the population to feel comfortable. If necessary, we can always enter the market and smooth out sharp fluctuations,» Tolkunbek Abdygulov summed up.

Anti-Russian sanctions will have their impact

An economist Marat Sagyndykov is confident that the U.S. dollar will definitely rise in price. It’s all about the new sanctions against Russia. One part was used in November 2018, the second is to be expected in February 2019. The exchange rate of the ruble will change and som will follow it.

«The som now is even stronger than the ruble. This is due to the regular interventions of the National Bank. For the time being, the National Bank of the Kyrgyz Republic will keep the exchange rate at the current mark. But we were psychologically prepared for the fact that the dollar would cost about 70 soms,» Marat Sagyndykov believes.

I think that in February the exchange rate will be set loose, because they cannot spend the reserves for so long on keeping a certain som’s exchange rate to the dollar.

Marat Sagyndykov

However, the expert is confident that even after this there will be no sharp jump of the dollar to som. The National Bank will try to keep the exchange rate at around 70 soms, because the higher cost of the American currency will negatively affect the economy of Kyrgyzstan.

«Most of the settlements in our country are in dollars, so our economy will not stand even the rate of 75 soms for $ 1,» the expert explained.

The National Bank will do everything possible to keep the rate at 70 soms for the next five years for sure.

Marat Sagyndykov

An economist Kubanychbek Idinov shares the same opinion. He is confident that the dollar exchange rate above 70 soms will have a bad effect on the country’s economy and on the welfare of the population. Therefore, the National Bank should use its reserves to keep the rate at this point.

«If the dollar exchange rate is above 70 soms, it will have a bad effect on the population: there will be inflation and a decline in income. This can not be allowed. Our international reserves are over $ 2 billion. This is enough for the entire 2019 year not to let the exchange rate grow higher than the current mark,» Kubanychbek Idinov said.

Look at the ruble

The Kyrgyz authorities love to say that the situation in Russia does not directly affect the state of affairs in the country. But the impact is still felt.

Kyrgyzstan is seriously dependent on remittances of labor migrants, so the situation with the exchange rate of the ruble to the dollar in 2019 will have its impact on som.

The Russian ruble lost almost a fifth of its rate to the dollar in 2018 due to the current sanctions and the threat of new ones, as well as due to the departure of investors from developing markets. In 2019, experts expect strong fluctuations in the ruble exchange rate.

«According to Sberbank’s forecasts, the average dollar exchange rate in 2019-2020 will be 65–70 rubles with the cost of a barrel of Urals oil of $ 60–65. VTB Capital analysts forecast an average annual ruble exchange rate at 68.4 rubles per dollar and 77.3 rubles for a euro, at the end of 2019 — 69.1 rubles for a dollar and 77.4 rubles — for a euro,» RBC newspaper says.

In an interview with Kommersant newspaper, Evgeny Nadorshin, a Chief Economist at the consulting company PF Capital, noted that he expected a rate of 75 rubles per dollar by the end of 2019. It is highly likely to see a cheaper ruble even in the first half of 2019. This is due to decrease in oil prices and additional sanctions against Russia.

But a survey of financial experts by Reuters showed that after the growth of the dollar in 2018, the currency would face problems in 2019 due to growing concerns about a slowdown in U.S. economic growth. One more problem for the dollar is that the U.S. Federal Reserve System will not raise the interest rate as often as it previously reported.

Speaking from the perspective of the future, there are no opportunities for significant dollar growth.

Eugene Philalithis, Manager at Fidelity International