The leader of the fall in July 2018 was the national currency of Tajikistan (somoni), which dropped its position against the dollar by 2.87%, and the leader of the growth was the currency of Moldova (lei), which managed to grow by 1.86%.
Strengthening by almost a percent was possible to the Uzbek soum, the Armenian dram could only rise by 0.21%. Kazakh tenge, on the contrary, sank by 2.34%. The Kirghiz som was able to win back 0.2%, reaching the level of 68 per dollar. The Moldovan lei, which became the leader of growth and gained 1.86% from the dollar, could actually do this on a massive inflow of foreign currency through export supplies, remittances from Moldovan citizens from abroad.
The currencies of other CIS countries showed a decline. The reason for the depreciation of the Tajik somoni, according to the Head of the Sughd regional administration of the National Bank of Tajikistan Navruz Valiev, was the negative trade balance of the country, as well as a large amount of public debt. According to the results of the first half of 2018, the trade deficit amounted to 441.9 million dollars. We note that since the beginning of the year the somoni has fallen to the dollar by 3.8%, and, according to our estimates, the decline may continue.
The Belarusian currency fell by 0.83%, reaching 2 rouble per dollar. The national currency of Azerbaijan did not show any serious movements, losing only 0.03% in the absence of significant factors for the dynamics of the exchange rate. By the beginning of August, the Russian rouble fell 0.42% to 63.05 rouble to the dollar.
The dynamics of the main CIS currencies was under the pressure of a declining oil price, which, due to the growth in production by the OPEC + countries, lost 7.7% in July to $72 per barrel. An additional factor of pressure was the medium-term sanctions risk for Russia, as well as the geopolitical pressure of the US-China trade war, in which the US clearly has a stronger position.
Russia: From a macroeconomic point of view, the Russian rouble has a rather negative background. On the one hand, according to a recent report of the Central Bank, the annual rate of GDP growth in the 2nd quarter was 1.8-2.2% compared to 1.3% in the first quarter. This was facilitated by the growth of investment and consumer demand, as well as the successful football World Cup. However, on the other hand, this impact can be considered one-stage, and in the future we are likely to face a slowdown in GDP growth. Moreover, the Bank of Russia does not exclude the excess of the target level for inflation due to the growth of VAT from 18 to 20%. Recall that in June, inflation was 2.3%, and 2.1% for the first half.
In the aggregate of factors, we can speak about the consolidation of the rouble above the level of 63 per dollar, with the prospect of further weakening if the oil price continues to decline.
Belarus: It should be noted that the formation of the Belarusian rouble is under the control of the regulator. The National Bank of Belarus notes that the real rate of the Belarusian rouble has approached the market. In addition, in late July, the President of the country signed a decree "On the abolition of the mandatory sale of foreign currency." This instrument was previously used to stimulate the supply of foreign currency on the national currency exchange.
Against this background, a decrease in the supply of the US dollar on the horizon for several months can be expected and, correspondingly, the pressure on the Belarusian rouble.
Kazakhstan: The tenge, traditionally associated with the Russian rouble exchange rate and oil quotes, has expectedly decreased on the negative dynamics of oil quotes. The growth of industrial production in Kazakhstan for the first half of the year was 5.2% compared to the same period in 2017. The GDP growth rate for the same period was 4.1% against 4% for the entire year 2017. However, it is already obvious that the growth rate is slowing down, in particular, the Kazakh government forecasts a final growth of 3.8%.
Against this background, the tenge will continue to weaken, not only in the medium-term, but also in the long-term. We believe that the mark of 350 tenge per dollar, the currency of Kazakhstan will overcome in the near future.