1. Holiday Fundraiser

    UPDATED INFORMATION! Merry Christmas! Help us meet our Christmas Fundraising Goal! FRN is in it for the long haul, despite constant attacks from the Atlantic Council and NATO. We're in the game because of the support of readers like you. God Bless! IF OUR INTERFACE ISN'T WORKING FOR YOU, OR IF YOU WANT TO USE YOUR PAYPAL DIRECTLY TO FORT RUSS - HERE'S OUR PAYPAL ADDRESS! -- [email protected]
    $1,053.87 donated of $3,000.00 goal

    Read More

THE GOLD FACTOR: RUSSIAN RUBLE SIGNIFICANTLY STRONGER THAN ESTIMATED

7 2,518

Published on: Oct 1, 2018 @ 11:48 – The Russian currency has hit the list of the three most underestimated currencies, according to a study by economists at Deutsche Bank. ‘Gold’ is one of the factors in understanding part of this phenomenon. 

Deutsche Bank researchers used the behavioral equilibrium exchange rate methodology, or BEER.

This methodology was elaborated in 1999 by the economists Peter Clark and Ronald MacDonald and allows to see the discrepancy between the real exchange rate and the macroeconomic indicators of a country, like the inflation or the productivity.

To evaluate the exchange rate of a currency in relation to the basket of currencies, the currency pairs are compared against each other in terms of their weight in foreign trade. In doing so, economists have concluded that the current exchange rate of the ruble is 15% lower than its real exchange rate.

Analysts predict the strengthening of the Russian currency from the current 65 rubles to the dollar for 60 rubles, reports Russian magazine RBC.

- Advertisement -

In all, the Deutsche Bank researchers evaluated 31 currencies. According to his calculations, 10 currencies are overvalued and 21 are underestimated. Besides the ruble, the Turkish lira, which is 46.2% less than its real value, and the Colombian peso, with 22.2%, are in the list of the three most underestimated currencies. As for the real, the Brazilian currency, it is also among the underestimated, ranking ninth in the list.

The Czech crown, the South Korean won, the Thai baht, the US dollar and the Swiss franc are among the five most overvalued currencies. For example, the dollar is overvalued at 7% of its real value.

So as the US continues to adopt new sanctions against Russia, Moscow fights against the hegemony of the dollar and increases its gold reserves, which have quadrupled since 2008 and reached 2,000 tonnes.

“Owning gold is undoubtedly a smart path” for a country that wants to reduce its dependence on the US currency, Thorsten Polleit, an honorary professor at the University of Bayreuth and co-founder of an alternative investment fund, said.

“If Russia decides to back the ruble for gold, this would be a powerful way to change the rules of the game of the global financial system,” said the economist.

Subscribe to our newsletter
Sign up here to get the latest news, updates and special offers delivered directly to your inbox.

Get real time updates directly on you device, subscribe now.

Comments