Record Comes From Where Not Expected: On What To Happen To The Dollar

Forecast on currencies.

The beginning of the second half of the year, as we expected, passed on a quiet note. At the end of last week, the U.S. dollar exchange rate in the Belarusian currency market rose by 1.56% and at the close of trading on Friday, July 5, stopped at the level of USD/BYN 3.2155. See the weekly forecast on currency rates in the second week of July in the weekly forecast from myfin.by.

Since the beginning of 2024, the change in the dollar exchange rate has been +1.20%. The dollar trading volume last week was in the range from $16 to $26 million per trading session.

The Russian ruble exchange rate declined by -0.83% over the same time and closed Friday at RUB/BYN 3.6398 per 100 Russian roubles. Since the beginning of the year, the growth of the ruble exchange rate decreased to +4.02%. The trading volume for the week is slightly above average.

The reason for the weakening of the Russian ruble exchange rate with simultaneous strengthening of the US dollar was the depreciation of the Russian currency on the over-the-counter market of Russia. The tax period ended, the supply of foreign currency slightly decreased with a simultaneous reduction in sales of Chinese yuan by the Russian Ministry of Finance.

All this led to the situation when on the OTC market the USD exchange rate was rising in the first half of Friday to USD/RUB 89.00. But by the end of the week there was a correction on the Russian market, and by the end of the week the dollar exchange rate cooled down a bit to USD/RUB 88.0079.

It is possible that this was a result of the weakening of the dollar on the global financial market after the release of US labour market data. At 15:30 Moscow time, the June NFPs were published, which saw the EUR/USD major currency pair rise to 1.0842. The price of an ounce of gold at the same time returned to the 2400 USD/Oz mark after a correction to almost 2300 USD/Oz.

Why the Gold Price is Rising

This is worth mentioning separately, as gold has gone into a long sideways slide since the noble metal's meteoric rise in April 2024. On the monthly gold chart, a dodge was forming in June as the end of the trend, but with the beginning of July, the price went to the upper levels with the prospect of breaking through resistance.

In the event that gold retests the all-time high and goes to the 2500 USD/Oz level, the road to 3000 opens up further. Relatively recently, this price of the noble metal seemed fantastic, but after bitcoin's value above 70,000 BTC/USD, nothing is impossible anymore. Now the crypto has gone to 50,000, while gold remains at its peak. The autumn period is not far off, when demand for the metal grows in India and China due to Eastern traditions, so it would not be surprising if the 2,500 mark is overcome by the end of the year.

Returning to the domestic market and the Belarusian ruble, we can expect the current week to be relatively calm. There are no factors for a significant change in the rate of the Belarusian currency. The Russian ruble may also enter the neutral zone, as the support and pressure factors are approximately the same.

The tax period is behind us, but oil prices are at local highs. The Brent mark was up to 87.88 USD/br last Friday, which is quite favourable for the Russian budget. On Thursday July 11, the Bank of Russia is expected to publish the balance of payments for January-June. The balance is expected to be positive. In addition, we should not forget about the upcoming meeting of the Central Bank's Board of Directors on the key rate, at which the probability of raising the parameter is very high.

Thus, given the formation of the dollar rate at the Russian stock market around USD/RUB 88.00, one can expect its rate around the current USD/BYN 3.220 at the Belarusian trading. The Russian ruble is expected to remain unchanged.

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