16 mar
2020
12:32
Markets
Main Events of the Past Week: Situation on the Currency and Stock Markets

The dollar rose against the ruble; stock markets and oil prices fell to record levels; the gold rose in price. The coronavirus will cost the economy $1 trillion.

Last week was troubled for the global economy, markets fluctuated feverishly. The main cause of instability was the spread of the coronavirus.

● The dollar exchange rate returned to the level of 2016. For the first time in 5 years, it pushed above the ₽75 mark. In general, since the beginning of 2020, the US currency grew by 17 %, the same is true for the euro. This morning, the USD/RUB currency pair is traded at the rate of ₽72.8847, while EUR/RUB – at ₽81.5362.

● Stock markets fell to the level of the Great Depression. Within just a week, the S&P500 index fell by 18 %, as much as the Japanese Nikkei. Europe was hit even harder: the most significant price drops were in the UK, Germany and France – by more than 20 %, and in a virus-plagued Italy – almost by 30 %. The RTS dollar index of the Moscow Exchange lost almost a quarter of its value for 4 days.

● Oil prices experienced the worst drop in 30 years. The price dropped from $50 to $30, after the OPEC+ meeting failed to agree on further oil production cuts. Russia offered to maintain the existing parameters, after which Saudi Arabia impulsively decided to reduce the sale price to $25 and increase the oil production by 3 times. This level of prices is unacceptable for a country that runs a budget surplus when the oil price is not lower than $75 per barrel. The equilibrium price for Russia is $42, and the acceptable price is $35 per barrel.

● The gold price rose to $1,700 per ounce – the level of 2012. The collapse of stock indexes led to an increase in the price of this precious metal. Investors consider gold to be a protective asset and always buy it in crisis periods. After a sharp rise, the price fell, but experts expect a further rise after the Federal Reserve and other central banks cut the rates to mitigate the impact of the coronavirus pandemic on the economy.

According to the UN, the virus attack will cost the world economy at least $1 trillion.