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Spring Fever Of Belarusian Currency Market

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Spring Fever Of Belarusian Currency Market

We are waiting for the "hot" beginning of May.

As it turned out in April this year, with the onset of heat, not only the tree buttons burst up but currency markets too. This is true for the over-the-counter Forex market, and for the Russian and Belarusian domestic currency markets, the website myfin.by writes.

The dollar gets stronger in the global market

At the end of April, the DXY dollar index (the ratio of the US dollar to a basket of six major currencies) rose to a 2020 high of 103.835 p.p. The week closed at 103.23 p.p. The EURUSD currency pair fell to a 2017 low at EURUSD 1.0485, and the weekly closed at EURUSD 1.053.

The reason for such a sharp strengthening of the "buck" was the market's expectations of an increase in the interest rate by the Federal Reserve System by 50 basis points. The next meeting of the Federal Open Market Committee will be held this week, the results of the meeting will be announced on Wednesday at 22:00 Moscow time. The latest data from the US consumer market (employment and inflation) indicated that the rate hike is obvious.

After the speech of the head of the Fed, Mr. Jerome Powell, on April 22 and his statement about the high probability of a key indicator increase by 50 basis points, the market began to move, which resulted in the dollar's sharp increase by the end of the month.

But according to the objective evaluation, such an expensive dollar is not much needed by the US budget, since against this background the yield of US Treasury bonds has increased (10-year Treasury yield close to 3.00%). It additionally burdens the budget with all the consequences.

The market for the actions of states for the same reason was reduced by several percentages, which gives a good occasion for the purchases of securities.

It will not be surprising if after May 4 in the Forex market the EURUSD pair makes a reversal and the immediate target may be the level of EURUSD 1.085 - 1.100.

Russian ruble returned to pre-crisis values

The Russian market also strengthened significantly in April (after the March crisis) and by the end of the week, the USDRUB pair returned to the values of the beginning of the year.

The final point was the Friday meeting of the Central Bank of Russia, which decided to reduce the key rate to 14.00%. Recall that at the end of February the Bank of Russia sharply raised the rate to 20%, but as the situation on the Russian financial market stabilises, the rate is reduced a second time.

The Russian currency feels more than comfortable and the USDRUB pair sometimes fell to USDRUB 70.96. Recall that in March the dollar rose to historical highs of USDRUB 121.28. Who would have guessed that in just over a month the rate would return to pre-crisis values.

But the administrative regulation of the Russian market has not been completely abolished, so it is not yet advisable to exclude any surprises.

The currency market may be "hot" at the end of the week

As we assumed, all these tendencies of April, and especially the last week of the month, were reflected in Belorussian currency market as in a mirror.

The exchange rate of the US dollar has decreased by 0.19% (for the month as a whole -4.34%, -2.11% since the beginning of the year) over the past week.

The Euro went below even more: by 3.36% for the week and by 15.21% for April as a whole. Since the beginning of the year, the euro has "lost weight" in the Belarusian market by 3.50%.

The Russian ruble rose to historic highs at RUBBYN 3.6903 per 100 Russian rubles, or 7.52% since the beginning of this year.

Since the main expectations from the Russian market have already come true, and we will know the results of the Fed meeting on May 4 on Wednesday evening, we can expect that the end of the first week of May will be “hot”.

It is premature to predict the further direction of the currency market. But there is a high probability that the euro will push back from local lows to the US dollar and may pull up to the EURBYN 2.85 mark in the Belarusian market. The Russian ruble may adjust to RUBBYN 3.65 per 100 Russian rubles. The American currency, possibly, will stop on the mark of USDBYN 2,65.

The opinions of experts of banks, investment and financial companies in this article may not coincide with the opinion of the editors and do not constitute an offer or recommendation to purchase or sell any assets or currencies.

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