Slump in Dollar Value Over a Brief Period: Anticipating Currency Exchange Rates in Early May
Get Ready for Currency Cha-Cha in May!
Brace yourselves, folks! May is knocking on our doors, and with it comes a whirlwind of holidays on both local and international monetary markets. Last month was a rollercoaster, especially for the Belarusian internal currency market, which had only two trading days due to holidays. Yet, foreign currency exchange rates stayed relatively under the radar, sticking close to their April averages. Let's dive into our predictions for the first week of May.
First up, the greenback! The USD/BYN exchange rate dipped slightly over the two days, landing at a resilient 3.0405. Although there was a slight drop of -0.35%, the year-to-date trend is still negative at -12.47%. Weirdly enough, the short trading week had unusually high trading volumes, with 20.873 million USD traded on April 30 due to a strong demand for greenbacks.
Next in line, the ruble. It followed a typical pattern, showing an increase over the two trading days, ending the week at RUB/BYN 3.6557 for 100 Russian rubles. The overall increase was +0.24%, with the ruble up +9.16% year-to-date. The ruble's steady performance can be attributed to low demand for foreign currency, the Central Bank of Russia's tight monetary policy, and a bit of geopolitical optimism regarding the Ukraine conflict. Yet, the overall picture is bound to change once May rolls in.
Now, the USD exchange rate on the Belarusian currency market took a nosedive by nearly 3% in April. In contrast, the USD/RUB exchange rate on the Russian financial market stayed within a tight range of approximately 81.5 to 83.0 rubles per USD. The ruble was shored up by a combo of tight monetary policy, low demand for foreign currency, and some geopolitical cheers. But don't get too comfortable—next week's scene could be quite different.
Upcoming monetary policy may not ease up anytime soon due to high inflation and pro-inflationary factors. The IPCE for April clocked in at a sizzling 10.34% and doesn't seem to be cooling down soon. Meanwhile, Russia's Ministry of Finance, citing falling oil prices and the current exchange rate, has tweaked the budget deficit upwards. Despite the relatively strong ruble, the Ministry of Finance has no intention of intervening in the current exchange rate formation and manipulating the ruble's value.
Geopolitical factors could also stir up some surprises. While some optimism about easing sanctions is wearing off, both the US and the EU are cooking up new restrictions against Russia. Details are still unclear, but the information landscape is shifting.
This week on the global financial market could also have its unexpected moments. The Fed's next meeting on interest rates is scheduled for Wednesday, April 7. Although there used to be rumors about the Fed initiating an easing cycle, recent US labor market and inflation data have pushed that prediction back to at least the end of 2025. The job creation numbers were disappointing, and inflation remains above the 2.00% target. The EUR/USD pair continues to bob around 1.1300, with no sign of the greenback strengthening in the foreseeable future.
In summary, the USD/BYN exchange rate on the Belarusian market is likely to hover around the tough-as-nails 3.050, while the Russian ruble continues on its path of minimal growth.
Experts' opinions from financial, banking, and investment institutions are shared in this section. Don't mistake these opinions for offers or recommendations to buy, sell, or hold any assets or currencies.
[4] Data source: Investopedia, MarketWatch, FXStreet, and The Wall Street Journal
- Some experts predict a decreasing trend for the Belarusian currency market as the USD exchange rate took a nosedive by nearly 3% in April.
- On Wednesday, the Fed's next meeting on interest rates is scheduled, which may have an impact on the average exchange rates of various currencies, including the USD.
- The Russian ruble, which showed an increase over the past two trading days, may face challenges in May due to geopolitical factors such as new EU restrictions against Russia and the potential tightening of monetary policies.
- Investors and financiers should keep a close eye on currencies, particularly the ruble and the Belarusian currency, given the increasing complexities and uncertainties in the global monetary markets.
