Weekly Forex Review (03/06/2023-03/10/2023)

Last week, tenge was adjusted to 446 tenge per dollar. In general, the main factors of the weakening were foreign economic factors.

The Dollar Index rose by 105.7 points. The factor for the growth was the statement of the Head of the Fed about the possible acceleration of the key rate increase. However, the Index fell to the level of 104.58 due to the employment statistics in the US.

Hawkish statements by the Head of the Fed lowered the price of oil. Thus, the price of oil decreased from $ 86.18 to $ 81.59 per barrel and was at $ 82.78 due to a decline in the Dollar Index at the end of the week. On Monday, OPEC published an Oil Market Monthly Review: there has been a surplus of oil since the beginning of the year (0.04 million barrels per day in January and 0.15 million barrels per day in February), which also put pressure on its value. An additional factor in the decline was data on oil imports from China. In January-February, gas imports decreased by 9.4% YoY, and oil imports by 1.3% YoY. Most market participants are still optimistic that China will increase import volumes amid the lifting of quarantine restrictions.

The dollar strengthening also significantly affected the dynamics of the ruble exchange rate. The Russian currency fell by 0.6% despite the support from the Ministry of Finance of the Russian Federation. This week, the Central Bank of the Russian Federation is expected to raise the key rate, which will rather have a short-term effect and strengthen the ruble exchange rate.

On Friday, the 16th largest by assets US bank, Silicon Valley Bank, went bankrupt. This is because both increased inflation and high rates can have a domino effect and add fears of a recession. We expect an increase in the value of the dollar and borrowing rates in the monetary market, which will give the effect of adjusting the tenge exchange rate closer to our forecast level.

March is usually considered the peak month of investment activity of companies. Companies update fixed assets and are mainly carried out in foreign currency. Given that last year, we observed reduced investment activity due to geopolitical tensions, and we will probably see record volumes of investments in fixed assets this year. This trend will affect the national currency exchange rate.