An Unexpected Decision: What's In Store For The Dollar This Week

Analyst's Prediction.

Last week ended without significant fluctuations in the exchange rate of the Belarusian ruble against major foreign currencies. However, the dollar rate was at the border of the annual minimum. What the rates of the dollar and other currencies may become in the coming week, says myfin.by financial analyst Mikhail Grachev in the traditional forecast.

We passed at the annual minimum

In the beginning of currency trading on the Belarusian Currency and Stock Exchange on Wednesday, July 16, the first transactions began to take place with the rate of USD/BYN 2.9110. But then everything returned to the current quotes, and the dollar rate ended last week with a minimal growth of +0.16%. Last week's closing rate USD/BYN 2.9350, the trading volume for the week in the average range of $51.667 million.

The exchange rate of the Belarusian ruble against the Russian ruble fell by an insignificant -0.13% last week. Since the beginning of this year, the ruble exchange rate has been growing by +11.54%. Last week's closing rate of RUB/BYN 3.7354 per 100 Russian rubles. The trading volume is also around average values with 16,092.930 million rubles.

New sanctions and "green light" for cryptocurrencies in the United States

At the end of last week, two events occurred in the financial market, which have a chance to affect domestic and global prices of major foreign currencies and the Belarusian currency market.

The first is the adoption and entry into force on July 19 of the 18th package of sanctions against Russian and related entities. This package includes Belarusian commercial banks and military-industrial complex enterprises. As for the Belarusian banks - in fact, the sanctions provide for a complete ban on transactions, which have been previously, since 2022, disconnected from the SWIFT system of international payments. In fact, these measures may strengthen the position of the Belarusian ruble against the U.S. dollar and the euro due to the already limited demand for these currencies from the real sector.

The second event of global scale was the adoption by the U.S. Congress and almost immediate signing of the law on regulating the circulation of cryptocurrencies in the U.S. financial system. The American cryptocurrency community is full of jubilation, but how much does the occasion match expectations?

In reality, this law only regulates the circulation of stablecoins. This is a variant of cryptocurrencies in which the digital coin being issued is rigidly tied to some recognized global reserve asset. For example, the U.S. dollar or gold or other. The U.S. law defines the size of the reserve asset to ensure the issuance, the status of issuers, etc. norms.

The law explicitly prohibits the issuance of stablecoins by the U.S. Federal Reserve System, that is, unlike, for example, Russia, Belarus, China and other countries, the U.S. law does not talk about the digital dollar. In fact, the law gives a green light for the issuance of corporate digital currencies, but most likely based on the US dollar. Another form of corporate assets analogous to bonds based on modern technology. There are no breakthrough ideas, it is the same, but from the side.

Nevertheless, the implementation of this law may support the attractiveness of the U.S. dollar, and it is not excluded that on the global financial market the rate of the main currency pair EUR/USD may turn downward and the nearest target is about 1.1450.

The Russian ruble continues to be influenced by long-term factors, and the dominant of them during the week will be the scheduled meeting of the Board of Directors of the Bank of Russia on Friday, July 25. There is a high probability that at this meeting the Central Bank may go for another reduction of the key rate, the only question is what will be the step of reduction. The forecast ranges from 1.00% to 2.00%, in fact, everything will become clear next Friday.

Weekly Forecast

The ruble exchange rate, both Russian and Belarusian, is likely to be in the support zone this week, and the dollar exchange rate at the Belarusian trading remains around USD/BYN 2.915 - 2.935. The exchange rate of the Russian ruble may grow minimally.

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