Compared to the euro, the dollar is edging lower
Today is a turbulent day for the EUR to USD pairing as the U.S. dollar dipped lower against the euro. However, its losses were restrained because traders were reluctant to make significant moves before an important European Central Bank policy meeting on Thursday.
The euro gains more than 3% in the previous four trading sessions in hopes that the ECB will deliver a significant 50-bps rate hike and on news from Reuters that a crucial Russian gas pipeline would reopen on schedule following maintenance. There’s a slight potential that the ECB would consider a 50 basis point boost caused the euro to spike today. As a precaution, the European Union instructed its members to restrict their gas use by 15% until March.
Price steering and capital controls. Typically, the value of a currency reflects the underlying economy to some extent. It only accomplishes so if you aren’t actively manipulating the price; as soon as you do, the currency starts to represent reality less and less and starts to resemble a meter that has been artificially inflated. Increasing the prime rate is one approach to increasing the cost of a currency. Right now, the prime rate in Russia is 17%. Therefore, credit card level interest if you desire a mortgage, a vehicle loan, or anything similar. The monthly payment for a new 30-year mortgage in Russia is nearly twice what it was on February 23. If a currency is unstirred, it should represent purchasing power.
USD against the world
Nevertheless, Russian inflation is at 16.7% and is still rising. Almost as though it costs more rubbles to buy items. As if the value of the money were actually reduced. And surely the economy is doing well if the ruble is back for good? It’s difficult to understand why Russian unemployment nearly doubled in a month and is now higher than in the US recession of 2008 (at 9%).
The ECB meeting and the reopening of the Nord Stream 1 conduit following a 10-day closure are both scheduled for Thursday, leaving the markets on edge. ECB may increase rates by 25 bps this month. However, until the verdict is announced, EUR/USD will be choppy due to the possibility of an upside surprise.
At $1.0234, the dollar was down around 0.1 percent versus the euro. Last Thursday, the Bank of Japan is anticipated to maintain its dovish position. In terms of cryptocurrencies, bitcoin increased by approximately 2.38 percent to $23,962.64, on track to post gains for a third straight day as traders bet the previous period of market weakness was over.
