Currency Factor in New Conditions of Geo–Economic Uncertainty and Crisis Development

Sokolova E. Y., Tanasova A. S.

A large body of research is devoted to various factors in currency policy. Questions about the revaluation or underestimation of the national currency rate, fluctuations, the variability of this per unit of time relative to another currency (that is, so-called volatility of the national currency rate), strengthening or weakening of currency regulation mechanisms are always relevant for the economy and participants in economic processes. There are two opposite trends that affect the amplitude and the frequency of course fluctuations, that is, they are pro – volatile factors in its change. All researchers note that the exchange rate volatility, that is, sharp changes in its unit of time, is a negative factor for the activities of individual industries, and in general for the economic development of any state. Volatility in emerging markets in times of instability in international financial markets and during crisis is especially high. A similar situation was observed recently in connection with the coronavirus pandemic, when uncertainty significantly increased, which led to an increase in volatility in foreign exchange markets. External circumstances, primarily pandemics, trade and currency wars, sanctions regimes with poorly predicted consequences, greatly affect volatility. Currently, in the context of the decisions made to stabilize the national currency, the supply of foreign currency has increased, and the ruble exchange rate is successfully restrained from a sharp increase, despite confiscation measures against Russia’s foreign exchange reserves and sanctions on its gold reserves. With the exhaustion of inventories and the development of new exchange channels, pressure on the foreign exchange market will increase, increasing the volatility of the national currency. Reducing the ruble volatility for a longer term can be achieved by a balanced budget policy, the development of national demand for domestic goods, and the development of new sales markets for traditional exports.

Keywords:exchange rate, volatility, currency policy, support measures, financial markets.