NUCLEAR POWER IN BELARUS AND WORLDWIDE
Human actions on the currency market are always based on psychology. The opinion was voiced by Vadim Iosub, senior analyst of Alpari Company, during the roundtable session held in BelTA’s press center on 25 August to discuss the state of affairs on the currency market.
Vadim Iosub said: “The term ‘psychology’ should not be dismissed lightly. Certainly, we cannot say there are no fundamental reasons for the descent of the Belarusian ruble. We cannot say the fall has been brought about only by some psychological effects and panicked actions of the nation. First, if the ruble falls, there is no major difference between the ruble falling due to fundamental reasons or the ruble falling due to psychological reasons. Second, we are not talking about events unfolding in some routine manner. We are talking about turbulence on the markets. This turbulence is always based on psychology and panic attitudes. The statement applies both to common people, natural persons, who buy $10 or $100 at a time, and to investors, who buy millions of dollars, and can experience panic mood. These moods should be accounted for.”
According to Vadim Iosub, in the last few years he has personally witnessed situations when after the monetary policy had to be toughened, it was later relaxed rather soon. “Maybe even sooner than necessary,” he said. “In particular, central banks of other countries have had to work in extraordinary conditions in the last few years. They have been forced to make unordinary decisions and stick to them for rather long periods of time. The situation is a bit different in the West now. Interest rates are low and are expected to rise. Nevertheless, the USA’s FRS has not raised the key lending rate since 2008 if I am not mistaken. In Europe some central banks have lowered the key rate to negative figures and have kept it like that for several years.
The low interest rate is not the point. The point is that regulating agencies are ready to wait for years before taking some steps and making changes. Psychology does not change fast. Devaluation expectations of the population do not change fast either. It seems to me it is necessary to do something to reduce the heat of these devaluation expectations and take real steps towards a softer monetary policy after that,” added the expert.
Vadim Iosub said: “The term ‘psychology’ should not be dismissed lightly. Certainly, we cannot say there are no fundamental reasons for the descent of the Belarusian ruble. We cannot say the fall has been brought about only by some psychological effects and panicked actions of the nation. First, if the ruble falls, there is no major difference between the ruble falling due to fundamental reasons or the ruble falling due to psychological reasons. Second, we are not talking about events unfolding in some routine manner. We are talking about turbulence on the markets. This turbulence is always based on psychology and panic attitudes. The statement applies both to common people, natural persons, who buy $10 or $100 at a time, and to investors, who buy millions of dollars, and can experience panic mood. These moods should be accounted for.”
According to Vadim Iosub, in the last few years he has personally witnessed situations when after the monetary policy had to be toughened, it was later relaxed rather soon. “Maybe even sooner than necessary,” he said. “In particular, central banks of other countries have had to work in extraordinary conditions in the last few years. They have been forced to make unordinary decisions and stick to them for rather long periods of time. The situation is a bit different in the West now. Interest rates are low and are expected to rise. Nevertheless, the USA’s FRS has not raised the key lending rate since 2008 if I am not mistaken. In Europe some central banks have lowered the key rate to negative figures and have kept it like that for several years.
The low interest rate is not the point. The point is that regulating agencies are ready to wait for years before taking some steps and making changes. Psychology does not change fast. Devaluation expectations of the population do not change fast either. It seems to me it is necessary to do something to reduce the heat of these devaluation expectations and take real steps towards a softer monetary policy after that,” added the expert.
