Analysis of Factors that Impact the Domestic Currency Exchange Rate

Abstract

Oil is one of the essential commodities for the Russian economy that plays a significant role in the world oil market. Countries are actively using this natural resource, increasing the volume of extraction and production. An oil exporting country's economic development factors are the successful processing of oil, obtaining oil products, and its usage in various industries, and not only as raw material exports. Currently, the main difficulties due to EU and US sanctions for Russian domestic oil and gas companies are associated with a change in logistics - the need to redirect export flows to the east to the countries of the Asia-Pacific region.

Because several factors determine the oil prices: the cost of oil production, technology integration, the world supply and demand, and socio-political factors, in the paper, the author analyzes different aspects that impact the domestic currency exchange rate, including the national oil market infrastructure support, transportation, and customs duties cost, tax expenses, access to the financial markets for needed renovations and technology integrations. All the above factors are of great importance that influence the resilience of the national economy that is oil and gas export dependent. This study aims to analyze the specifics of the Russian oil market and the impact of different factors on the state of the economy, including the implications for the world oil market.