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Currency news for Wednesday

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Currency news for Wednesday

Currency news for Wednesday
July 06
10:30 2016

The ruble has fallen against the dollar and the euro

At the Moscow stock exchange the US dollar and the euro have slightly grown against the ruble at the opening of the trading session on Wednesday. The ruble has fallen against the currency basket because of falling oil prices.

The first transactions on US dollars were carried out within 64,62-64,74 rubles. According to the results of the first minute of the trading session the rate was equal to 64.6475 rubles. (+33 kopeks to the indicator of the previous closing). The euro exchange rate stood at 71.5675 rubles. (+33.75 kopeks). The currency basket amounted to 67.76 rubles (33.3 kopeks).

The dollar took the position that was 38 cents above the current official exchange rate, the euro – by 6.5 kopeks below the official rate.

According to the specialists of “Interfax-CEA”, the fall of the exchange rate of the ruble at the opening of the trading on Wednesday is connected with the continuing fall of oil prices due to the general decline of the assets attractiveness, which are regarded as risky. It is also associated with the investment of the traders in government stocks, gold and yen. The cost of futures contracts for Brent crude oil has fallen by 0.08% – to $ 47.92 per barrel at the London Stock Exchange to the beginning of the day. The futures price for WTI crude oil for August has fallen by 0.1% – to $ 46.56 per barrel on electronic trading at the New York Mercantile Exchange.

The falling of oil prices on Tuesday was almost five percent because of the anxiety and uncertainty in the global economy after the British citizens decided their country should leave the European Union. In addition, the information about the growth of the number of drilling rigs and the increase in the volume of the raw material extraction in a number of raw material-producing countries also influences the fall of the market.

The inflation in Russia has accelerated this week

On Wednesday Rosstat has informed that the inflation in the Russian Federation for the week that ended on 4 July was 0.4%. Three weeks before prices grew at rates of 0.1% per week.

The increase of the prices growth in the first week of July has become common. This happens because of the indexation of tariffs for housing and communal services. This year the average increase has amounted to four percent since 1 July. This is significantly lower than in July last year (in general the utility rates increased by 8.3%).

Since early July the inflation has become equal to 0.3% as of 4 July. During the first week of July last year (as of July 6) the inflation was 0.7% due to higher tariff indexation.

Accordingly, despite the fact that the weekly inflation rate is being accelerated due to the fact that last year the sharp increase in prices was even more significant, the inflation decreased significantly in annual terms – to around 7.1% . It was 7,5% as of the end of June but became 7,1% as of 4 July.

The Yuan reference rate has fallen to the minimum over six years.

The Yuan reference rate has broken the record low over six years. On Wednesday the People’s Bank of China (PBC, the Central Bank of the country) approved the yuan reference rate against the US dollar at around 6.8570 yuan (-0.39% if  compared to the previous session). This reference rate has become the lowest since November 2010, according to the Financial Times.

On the market trading there might be the deviation from the reference rate for the yuan. It can be two percent in either direction.

In Shanghai the yuan has become cheaper by 0.17% – up to 6.6933 yuan. Over the last five sessions the Chinese currency has lost 0.8%. The offshore yuan , operations  on  which are produced outside the borders of mainland China and which is traded more freely, has dipped  by 0.23% in Hong Kong, falling to 6.7046 yuan / $ 1.

The experts of ABN Amro lowered the forecast of the value of yuan at the end of this year from 6.7 yuan / $ 1 to 6.8 yuan / $ 1. Goldman Sachs lowered the 12-month estimate for the Chinese national currency from 6.8 to seven yuan / $ 1.

On Thursday it is expected that China will publish the data on international reserves. As experts estimate, the reserves have fallen to $ 3.167 trillion. It has been the minimum since 2011.

Earlier the heads of China’s Central Bank noted the increase in risks at international financial markets, including the connection with the United Kingdom’s decision to withdraw from the membership of the European Union, which caused the increased volatility in almost all markets.

The People’s Bank of China pledged that China would maintain a stable yuan exchange rate at a “reasonable, balanced level”.

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