Tashkent, Uzbekistan (UzDaily.com) -- Against the background of an increase in the number of coronavirus infections in Europe and fears of re-quarantine, as well as the relatively tight monetary policy pursued by the US Federal Reserve, the US dollar is strengthening. As the Daiwa Securities group notes, the coronavirus issues and the need for more stimulus are turning flows back towards the dollar.

According to Bloomberg, the dollar index, which reflects the rate against 6 key currencies, is trading at 94.58 points, adding 1.6 points over the past week and demonstrating the maximum growth since the beginning of April 2020. 

The euro rate against the dollar fell by 1.8% over the week and has been at its lowest since 24 July 2020. The currencies of developing countries are also falling in price, in particular, the rate of the Russian ruble rolled back to the level of the end of April this year. - 77.2 rubles. for 1 dollar. The Turkish lira exchange rate has renewed its historical minimum - 7.67 for 1 dollar. Since the beginning of the year, the Turkish currency has fallen in price by 29%, and has fallen 3.5 times relative to the level of 2015.

Against the background of the dollar's appreciation, the following is observed.

1. The market for raw materials is falling. The price of gold in the auctions fell to a minimum since the end of June - US$1847.9 per ounce, having lost more than 11% against the peaks in August. Copper, an indicator of demand for industrial metals, fell by 5%, as well as silver - by 20%. The oil market is at risk. In particular, almost all the largest importers reduced purchases in September: China - by 14%, India - by 11%, South Korea - by more than 30%. As noted by ActivTrades, while the dollar is getting more expensive, raw materials will get cheaper.

2. The outflow of capital from developing economies is accelerating. In particular, investment funds focused on the Russian Federation over the past week dumped securities of Russian companies for a record amount of US$44 million. According to experts of the BNY Mellon company, optimism about the economic recovery, optimism about the virus and rates on new incentives in the United States are all that generated demand in the markets, turned into disappointment. According to Raiffeisenbank specialists, the fall in the markets is due to the dynamics of the dollar money supply, which since July this year stopped growing. As a result, the Fed's balance sheet has not been growing for the last four months.

In general, against the backdrop of yet another exacerbation of the epidemiological situation, as well as the restrained monetary policy of the FRS, further strengthening of the US currency and worsening of the situation in the commodity markets and in developing countries are expected.