National Bank capitulates. Devaluation announced

The National Bank of Belarus has let the Belarusian ruble float freely.

The National Bank lifted restrictions for banks regarding foreign exchange transactions with individuals on 11 May, 2011, as part of the plan to make a gradual transition to the single rate of the Belarusian ruble and stabilize the situation on the inner foreign exchange market.

Commercial banks were forbidden to sell foreign cash at a rate 2% more than the official exchange rate.

“The foreign currency deficit in the market segment in March 2011 was caused by the excess demand of individuals for cash foreign currency to buy vehicles from abroad and in connection with rumors stirring up panic among the population,” the press release of the country’s central bank says.

“The use of market approaches to setting the Belarusian ruble rate for transactions with individuals will not only satisfy the demand for foreign currency, but also make pointless the further panic buying of foreign currency for savings, which has been seen in the recent times in connection with expectations of the foreign currency rate change,” the National Bank said.