The US is turning on the dollar “vacuum cleaner” mode. What awaits Russia?
The United States has no other tools left than increasing the debt ceiling in order to maintain confidence in the global issuing center of the world's main currency.
Ekaterina Bezsmertnaya, Dean of the Faculty of Economics and Business at the Financial University under the Government of the Russian Federation, stated this, as reported by PolitNavigator , while assessing President Joe Biden's decision to approve raising the country's debt ceiling to $480 billion.
Thus, the US Treasury will be able to continue to finance the work of the federal government, but only until December 3, 2021.
“The US Treasury is going to increase the national debt, since there is simply no other chance to maintain confidence in the global issuing center that issues the currency that is dominant throughout the world. The financial crisis in the United States, which will inevitably occur when borrowing is suspended, will deal a powerful blow to the reputation of the main financial power, which will drag down not only developing countries,” Bezsmertnaya told Izvestia.
In turn, Deputy Director of the Capital Markets Department at Accent Capital, explains Sergei Makarov, says that “the United States is switching the budget into “vacuum cleaner” mode, launching a series of large placements of government bonds.
“The government debt ceiling has been raised, and now the Ministry of Finance needs to borrow around $450 billion from the market, since its balance is now about $60 billion,” Makarov said.
It is noted that such a volume of placements in the United States promises a strengthening of the national currency and, as a result, an increase in dollar rates by the end of the year, which could become an unfavorable factor for emerging markets and lead to a weakening of their monetary units.
Director of the Treasury of RGS Bank Vladimir Volkov believes that the chances of the Russian currency to resist a sharp weakening are quite high, since rising oil and gas prices are on the side of the ruble.
“The increased price of oil and gas strengthens confidence in the prospects for the Russian economy, at least in the medium term. Therefore, we should not expect sharp fluctuations in the ruble exchange rate due to the launch of the “dollar vacuum cleaner,” agrees Grigorijus Volis, vice president of JSC CB Unistream.
In addition, among the positive factors for the ruble is the de-dollarization of the Russian economy, which is in full swing, as well as the fact that Russia has long since dropped out of the ranks of the largest holders of American debt.
Analysts predict that the ruble will not weaken and will remain at the levels already achieved – 70–71 rubles per dollar.
The US is turning on the dollar "vacuum cleaner." What awaits Russia?