National Bank’s fairy tales have come to an end

In order to stabilize the exchange rate, the authorities must first of all solve the inflation problem.

The opinion came from a former Belarus’ National Bank chairman Stanislau Bahdankievich as he commented for the charter97.org web-site on US dollar’s reaching its historical maximum against the Belarusian rouble at Belarusian currency and stock exchange.

“I have long been saying that dollar’s exchange rate should be no less than 9000-9500 roubles. This is a normal trend. The main indicator in the economy is the price growth rate – the inflation. When prices are constantly growing, progressive devaluation is inevitable. That is why the growth of dollar and euro’s price is a naturally determined process”, - the economist highlighted.

The National Bank’s former chairman added that, according to the official data, the inflation is at the level of 8% now, but in reality it is significantly higher.

“The problem of price growth must be solved now. If prices do not grow, it will be possible to speak of stabilizing the exchange rate. But the prices are growing in the consumer market. Apart from that the indicators of the foreign trade balance have worsened in terms of mass of commodities. That is why, of course, there must be devaluation. It may be restrained only artificially and administratively by selling state’s resources, obtaining new loans and increasing deposit interest rates”, - Stanislau Bahdankievich continued.

The expert noted that the authorities are planning on having the inflation of no less than 11%, whereas it should be around 3-5% a year.

“In this case, the deposit interest rate could be lowered down to 5%, and the credit interest rate - to 8%. Then the economy would develop more or less adequately. The authorities should set the task of solving the problem of inflation – a most important qualitative indicator, but so far they are struggling with all the derivative problems”, - the former head of the National Bank summarized.

We would remind that the USA dollar’s exchange rate has accounted for 8930 by the outcome of the bargaining at Belarusian currency and stock exchange on 22 August.