What will the dollar exchange rate be at the end of 2018?

The trend of the dollar is determined by internal and external factors. The latter includes the publication of business activity indices in the United States. In addition to stock market values, the unemployment rate is also taken into account. The more stable the financial system, the more countries reserve their income to purchase US government debt instruments. Accordingly, the dollar receives additional leverage as a reliable currency of circulation and preservation of capital.

Let's look at the dynamics of the movement and try to clarify the stability forecast for the end of this year.

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To begin, let's clarify three basic parameters that influence the dollar exchange rate :

– Unemployment indicators;

– Stock index – capitalization of the 500 largest American companies;

– Demand for US Treasuries. The higher the demand, the more confidence in the dollar;

– Retail sales index.

A year after the start of the financial crisis, in October 2009, the US unemployment rate averaged 10,1%. The highest figure was recorded in 1982 – 10,8%. For the first half of this year, the level is 4%. Over the past 15 years, this is the lowest figure. The decline will continue next year. The trend has been going on since 2010, the point at which economic recovery began. Employment will be at a high level; at the end of this year and at the beginning of next year there are no visible threats or reasons for an increase in the share of the unemployed.

Let's now look at the index of the 500 largest US companies. The index is calculated taking into account, among other things, exchange trading volumes and growth in company values. In 2015 it amounted to 1,994 points, three years later it increased to 2,641. Yes, the last few months have been down. But this is more likely due to the Chinese trade wars - the US government is consistently introducing an increase in import duties on imports.

Finally, another factor accompanying the stable exchange rate is the demand for US Treasury bonds. The greater the demand, the greater the confidence in the stability of the US monetary system. Accordingly, exchange rates will directly depend on the stability of the dollar and the demand for debt instruments. After all, the governments of most countries in the world prefer to store their reserves in them - as the safest and most reliable instrument for preserving capital.

In 2018, US Treasuries attracted the largest capital inflows in two years. Against the backdrop of increased demand, the peak yield retreated from the February indicators – 2,95%.

The last indicator is consumer activity in retail sales. A factor directly affecting the stability of a currency. In May, June, July and partly August 2018, the retail sales index exceeded the established forecast. Since September, the actual figure has been less than the forecast. The deviation is not critical: in September minus 0,1%.

At the end of the year, we can confidently assume that the dollar's stability will remain unchanged. There is no objective data that can weaken it and reduce the exchange rate against the local currency.