Euro after. Before and after

A British young couple won 50 million euros in the lottery and bought a luxurious house for one and a half million. Five years later, it has become a haven for rats and a paradise for drug addicts, and neighbors who have not even seen the new owners are planning to sue them.

Matt and Cassie Topham are both 28 years old. Not long ago they worked as a painter and saleswoman in the small town of Stapleford, Nottinghamshire, England. In 2012, their lives changed: they won 45 million pounds (about 50 million euros) in the EuroMillions lottery. The couple decided to buy a house.

The choice fell on a huge mansion built in the 1930s in Nottinghamshire. The house has seven bedrooms, several bathrooms, a garden and a huge lawn. This pleasure cost 1.2 million pounds (a little more than 1.3 million euros). This is what the house looked like in 2012:

And here's what it looks like five years later:

The Tophams' neighbors have hardly seen them on the property and complain to journalists that the once charming place has turned into a garbage dump and haven for drug addicts. There are rats in the area. Adam Hill, a neighbor, told The Sun what the once beautiful and well-kept house had become.

The Tophams have a lot of money, and they would do well to spend a little on stopping this farce - or at least on safety. A local Snapchat group calls the house "The scariest place in Nottingham to take a selfie." And that’s why young people constantly climb there. The toilets were broken, rats crawled through the pipes and made their home there. There is an empty swimming pool in the yard, this is also dangerous, someone could be seriously injured.

Two or three times a year, neighbors call the police, but to no avail. Syringes are found in the house. Young people and teenagers who climb in there have completely destroyed the interior. There is a four-meter fence around the site, but it does not prevent anyone from climbing inside through the holes.

Cassie and Matt, as the press wrote, eventually decided to demolish the historic building and build a new house there. But so far there is no talk about this.

It's just a jungle. The Tophams tried very hard to make us dislike them.

The Topham mansion was formerly known as the Rainbow House. The property at the rear is adjacent to Bruce Wayne's home from The Dark Knight Rises. So this is not an easy place. However, the new owners were going to carry out a complete reconstruction and build an eco-house for 5 million pounds, which would look like the home of the Teletubbies.

To begin with, it is worth noting that the euro is a foreign currency that ranks second in the ranking of monetary units for which difficult times have come today. There are many reasons for the fall in the euro exchange rate at the moment; the situation as a whole was also influenced by Greece, which is mired in debt like silk and refuses to repay debt to its immediate debtors. It is difficult to give accurate forecasts of what the euro/ruble exchange rate will be at the end of 2019, but international experts still predict a period when the euro will fall even more. This will be discussed in this article.

What may affect the euro exchange rate in 2019

The exchange rate of the euro against the Russian ruble depends primarily on the following factors:

1. The interest rate set by the European Central Bank. So, at this time it has been reduced to the minimum threshold value. In this regard, experts are implementing additional programs that stimulate the value of QE.
2. The size of public debt in the European Union. In addition to Greece, loans were provided to Spain and Portugal. A decrease in the profitability of securities directly affects the foreign exchange rate.
3. If Russian oil prices fall sharply, foreign currencies will also suddenly rise. This is quite possible in the absence of free capacity in American oil storage facilities and with regular deliveries of black gold from Iran. The oil market is not stable, so at any moment the situation may change towards a decrease in the value of the ruble. For the domestic economy, such fluctuations do not mean anything good.
4. The ongoing crisis in Ukraine. The war is escalating further and further, and peace negotiations are looking more like a farce that is not yielding any results. The neighboring state is trying to influence the Russian Federation with sanctions from the European Union. One way or another, new restrictions are forcing Russian citizens to tighten their belts ever tighter.
5. Economic instability. A foreign investor leaves the territory of Russia and transfers his assets to another territory. More than a hundred financial and credit institutions may become bankrupt due to their own insolvency.

What to expect in the fall of 2018

If in the fall of 2015 the euro was 70.38 rubles, then in the second half of January it is expected that the euro will reach 74.35 banknotes in the national currency.

The highest indicators of the ruble occurred in April - May 2015, when the euro dropped to a value of 52.9 rubles. In June, the foreign monetary unit was already calculated at 61.95 rubles; at the end of July, this figure changed to 67 rubles. As of August 14, 2015, the euro remained at 65 rubles.

The main event of this week - the US Federal Reserve meeting - is behind us, and now the markets until the end of next week will be focused on one topic - the British referendum on the country's EU membership, scheduled for June 23 (Thursday).

The dominance of this topic in the information space will also be facilitated by the fact that the economic calendar until the referendum is extremely scarce.

In conditions of uncertainty regarding the results of the British referendum and its consequences, the demand for safe-haven assets - government bonds, gold, Japanese yen, Swiss franc, US dollar - is growing.

Risky assets, on the contrary, are under pressure - for example, oil quotes are already testing the level of $48 per barrel of Brent. This is certainly negative for the ruble, and if oil cannot stay above $48, on Friday the dollar/ruble pair will move into the range of 66.00 - 66.50 rubles. At the same time, an important driver of oil futures movements on Friday evening will be the weekly report from oil services company Baker Hughes regarding the number of operating oil drilling rigs in the United States.

As for the euro, the single European currency is one of the main victims of fears associated with the upcoming referendum, and therefore tomorrow I expect it to close in the range of 73 - 73.50 rubles.

Of the next week's reports, only reports related to the US oil industry also deserve attention - the US Department of Energy report on commercial oil reserves and production (released weekly on Wednesdays) and the Baker Hughes report on the number of active drilling rigs (released weekly on Fridays).

At the same time, it is obvious to everyone that the outcome of trading on the foreign exchange market next week will be determined by the British plebiscite. At the same time, not only its results remain in question, but also the possible reaction of financial markets to them, the scale of which is extremely difficult to predict due to the fact that many players will make decisions under the influence of emotions or speculative considerations.

Today we can only assume that the market will react to the victory of EU supporters by purchasing euros and a surge in demand for risky assets, including oil. In this case, the dollar may decline moderately against the ruble (by 30-50 kopecks), and the euro, on the contrary, will demonstrate a noticeable strengthening, rising to 75 rubles.

If the Eurosceptics win, the reaction will be the opposite, and the initial movements in the foreign exchange market can be very strong. A sharp drop in the euro to 72.50 rubles cannot be ruled out. The dollar, on the contrary, is capable of rising to the level of 67 rubles against the backdrop of falling oil prices, which could reach 47 dollars per barrel.

Many people continue to wonder what will happen to the euro in the near future. The unstable economic situation in the world forces people to look for ways to preserve their savings, and conversion into foreign currency is considered as one of the possible directions. We would like to emphasize that today experts are in no hurry to make forecasts, since most of them have turned out to be wrong in the last six months.

Strengthening of the dollar against the euro

In March 2015, most analysts spoke about the strengthening of the dollar against the euro. There were forecasts that by 2017 the American currency would be completely equal to the European one. Despite the pullback that could be observed throughout April, the situation has not yet stabilized. It is too early to say that the negative dynamics of the euro have finally changed.

The beginning of May was marked for the European currency by trading at the level of 1.1. Global agencies such as Goldman Sachs, Barclays and BNP Paribas stated that the “European” would reach this price mark only by the end of 2015. A more optimistic forecast was given by Wells Fargo representatives, who focused on the level of 1.22. We can talk about a dual scenario for the development of events. Two directions are being considered: a fall to a 2-year low and an increase to 1.22.

European economy

In the first half of 2015, experts expect GDP growth of 1-2%. For Europe, this indicator can be considered more than positive. Expected macroeconomic indicators set a positive outlook for the euro. This includes an unemployment rate of 9.5%, which relatively recently was only in the double digits, and inflation at 1%.

Experts associate the fall of the European currency against the dollar with the more active development of the American economy over the past two years. Despite the expected growth of the euro over the next couple of years, today the exchange rate is constrained by many factors. We can talk about a reduction in industrial production in Germany and in many other large countries. The problem is hidden in the uneven development of EU countries. The northern regions today are just recovering from prolonged stagnation.

The fall of the euro as a result of Mario Draghi's speech

Mario Draghi, in his recent spring speeches, has repeatedly said that he intends to take all measures to reduce public debt. This cannot but affect the euro exchange rate. Agency representatives say that the negative trend will also be supported by the relative openness of the European trading area, as well as the presence of deflationary pressure. An outflow of portfolio-type investments has been recorded, where the euro plays the role of a financing currency.

EU connection with Russia

It is worth noting the fact that the EU has a certain dependence on gas, which is imported from Russia, as well as on the import of its goods into the territory of the Russian Federation. Volumes of both gas and imports are declining today due to sanctions that leave a negative imprint on EU states. Despite the current trend, the euro exchange rate, according to world analysts, will not grow for a long time. Investors no longer hope for the strengthening of the European monetary unit. As experts say: “the era of the dollar is in full swing.” The only thing we can hope for is restrictive actions on the part of the American government, which will keep the national currency exchange rate at a certain level.

Considering the question of what will happen to the euro in the near future, many experts are trying to impose the situation with Greece on the course formation process. Analysts from the global agency Stratfor are considering only two options for further developments:

• Greece may leave and Germany will introduce the Deutsche Mark. This is one of the most negative forecasts for the EU, which will send the euro/dollar pair on a far southern voyage. Here there is a risk of a complete collapse of the European currency.
• The second option is to continue the partnership with both Greece and Germany. The financial support that will be provided to states will not destabilize the global EU economy, but will only slow down the rapid pace of its growth, which will not be a catastrophic phenomenon.

“One dollar - one euro” as one of the alternative scenarios for the development of events

Considering the question of what will happen to the euro in the next few years, Goldman analysts voice the exchange rate at $0.9 = by 2017. Experts keep talking about the threat of deflation and practically zero, and in some places, negative economic growth. Since the beginning of 2015, the European national currency has fallen by 2.6% against the currencies of 9 countries. There is relatively little time left before parity with the dollar, only about 15%.

It is worth recalling that the euro exchange rate had already dropped to the same level as the American currency in 2012. At the end of 2014, the euro lost almost 12% of its value. According to Chris Iggo, head of fixed income at AXA Investment Management, parity will be achieved if the monetary policies of the ECB and the Fed remain the same. Let us mention that in the fall of 2014, the ECB lowered the deposit rate by 0.2%. Echoes of Draghi's message about the purchase of sovereign bonds of European countries and the implementation of the next stage of the quantitative easing policy are noticeable today in the format of the fall of the euro/dollar pair.

Temporary recovery

Today's northward pullback in the euro is a direct consequence of the actions taken by the ECB at the end of 2014. We are talking about reducing the interest rate from 0.15% to 0.05% and reducing the deposit rate, which was mentioned earlier. These record low figures for the European zone stimulated active lending by banks to the real, rather than financial, sector of the economy. Only six months later, after the ECB took drastic measures, the European economy began to gradually recover. Let us remember that no one guessed about the rate reduction. Such a scenario seemed possible to only six economists out of fifty-seven interviewed.

Euro and Russian national currency

Despite the fact that the euro's outlook for the dollar remains negative, the ruble/euro ratio will be completely opposite. The European currency will continue to grow against the ruble in the near future. The weakening economy of Europe is in a very advantageous position against the backdrop of Russia. The situation is due to events taking place in the global oil market. In parallel with the fall in oil prices, the euro exchange rate will also rise. Despite today's rise in oil prices, experts are still waiting for oil prices to drop to their January minimum, so we can count on a second surge in the growth of the euro in Russia. Do not forget that the forecast remains a forecast, and there is a high probability that the ruble will begin to strengthen its position.

What will the price of the euro be, according to the world's best analysts?

Experts' opinions regarding the euro differ and are characterized by their optimism. Deutsche Bank believes in a fall below parity and is settling on a rate of $0.95 per euro by the end of 2017. The author of the forecast, George Saravelos, is based on the fact that in 2000 the euro/dollar pair was trading at 0.8300. Due to the wave structure of exchange rate fluctuations with a periodicity of seven to nine years, Deutsche Bank experts do not see anything catastrophic in the situation.

The British bank HSBC gives a slightly different forecast for the euro exchange rate. Experts from the financial institution are confident that by the end of 2015 the euro will trade at 1.19 against the dollar. Barclays representatives prefer the level of 1.1, which can still be seen today, but Morgan Stanley experts are inclined to the 1.14 indicator.

At the moment, it is difficult to say how the euro will behave in the future. The price today is not stabilized, in fact, like the EU economy itself after the crisis not only at the end of 2014, but also in 2008-2009. The complex factual situation does not prevent many analysts from believing in a very promising future for the European monetary unit. It remains to be seen what will happen to the euro next.

Photo: Artem Geodakyan/TASS

Net capital outflow from the eurozone has reached its highest level since the existence of the single European currency. This trend will lead to at least parity between the euro and the dollar next year, and in a negative scenario, to a fall in the euro exchange rate below the dollar, analysts say.

Net capital outflow from the eurozone for the 12 months ending in September 2016 reached record levels, The Wall Street Journal reported, citing ECB data.

During the reporting period, European investors bought shares and bonds outside the zone for €497.5 billion ($516.5 billion). At the same time, international investors sold or waited for the redemption of bonds of issuers from the eurozone for $31.3 billion during the year. Thus, the net outflow of capital from the eurozone amounted to €528.8 billion, which was the maximum since the introduction of the euro in 1999.

Against this background, the euro continues to fall against the dollar. A number of analysts surveyed by the publication believe that in 2017 the euro will reach parity with the dollar. In particular, TD Securities analyst Ned Rampeltine expects the euro to fall below the dollar in the first months of next year. Analysts at Morgan Stanley and Goldman Sachs expect currency parity to be established by the end of 2017. Deutsche Bank predicts that the euro will fall to at least $0.95 in 2017 amid increased capital outflows from Europe.

On December 14, the US Federal Reserve raised the base rate to 0.5–0.75% for the first time since December 2015. The pace of base rate increases is expected to accelerate further, while the ECB rate remains at zero.

In December, before the Fed meeting, according to Consensus Economics, analysts predicted that the euro would reach $1.057 by the end of 2017. But the dollar rose 2.5% against the euro after the Fed signaled plans to hike rates three times in 2017, rather than twice as the Fed had said in October.

“The last time we saw this happen over a period of months was 1979 and 1997, when the dollar rose 30% and 20% respectively,” said Deutsche Bank strategist George Saravelos. The dollar's rally could have serious consequences, driving up inflation in other countries and reducing U.S. exports.

Abandonment of the euro

The head of the investment company Burnbrae Group, Jim Mellon, whose fortune was estimated at more than $1 billion in 2014, previously told Bloomberg that increasing dissatisfaction among residents of the European Union with the policies pursued by EU governments would lead to the collapse of the bloc over the next five years.

Mellon forecasts the euro will fall below parity “sometime next year,” but he is in no rush to sell the euro as he hopes to capitalize on short-term fluctuations.

“Brexit will be a secondary event to the problems that are brewing in Europe. The euro is currently an extremely inconvenient instrument. I think he will live another one to five years,” Mellon said.