Russia » Economics

World save the US

Euro is expected to strengthen in 2004. Experts arrived at such conclusion after the European Central Bank had left the percentage rate of 2% (annual fee) unchanged. Dollar rate has decreased by 1% in relation to Euro immediately afterwards. International Monetary Fund (IMF) in turn, does not exclude a possibility of Dollar's possible collapse with further crises of world’s economy.

In its lengthy overview, IMF has warned the United States that a huge budget deficit, tax reduction as well as the war on terrorism can all have a negative impact on the world’s economy. The Fund asked the US to take proper actions to recover its sinking currency. It seems however that America is not concerned with world’s problems. While using such Dollar devaluation, American authorities continue to stimulate its own economic growth.

It is enough to mention that American GDP has reached 8% in the third quarter of 2003. While lowering taxes, the United States increase people's purchasing capacity as well as the overall internal demand. As a result, the country's budget carries significant losses, while the country's debt continues to rise. According to most recent calculations conducted by American experts, America’s budget deficit will reach $480 billion in 2004.

In the meantime, countries with sagging dollar reserves continue to keep the foreign economic system afloat. Russia is one of those countries.
Analysts still ponder how world's financial markets are going to behave…

Optimists however predict that substantial Dollar increase will take place no later than the second half of 2004. Russia for instance is incredibly interested in such turn of the events, since the country’s almost entire export is paid for in dollars.

Former head of the Central Bank Victor Geraschenko in turn remarked that the final “equation” of Dollar in its relation to Euro will most likely occur in a year or a year and a half. He also considers that no threat exists to any long term savings in dollars for Russians. At the same time, Geraschenko suggests that one should exchange his money to rubles in case a person plans to make a substantial payment in this currency. 

 

Vladimir Alexeev

Source: “Trud”