Barys Zhaliba: Queues of foreign currency buyers could return

The situation with the Belarusian ruble is close to the currency crisis of 2011.

Such an opinion has been expressed in an interview to charter97.org by Professor, Doctor of Economics Barys Zhaliba, who commented the currency market situation in our country.

- Today the US dollar and Euro have hit a fresh all-time high to the Belarusian ruble. To your mind, how the currency market situation in Belarus is to evolve?

- After a certain reinforcing, the Belarusian ruble has returned to the streamlined path of devaluation. And in the future it is to follow this path. One can just ask the question when this devaluation is going to slow down, and when it is to pick up the pace?

Very many factors are to influence that. They are to be external factors predominantly, though there are internal factors as well.

The external factors include, first of all, devaluation of the Russian ruble. And it is destructive for us to lag behind: as the last year has demonstrated, we immediately start to lose earnings from the export to Russia.

Secondly, oil prices continue to come down, and they have not hit the bottom yet. Even the oil of the highest quality, Brent, costs less than $50 per barrel. It primarily hits the economy of Russia, and secondly the economy of Belarus, as our main export item is oil products.

Thirdly, the Russian economy is deepening into a recession. In Q2 of this year the gross domestic product of Russia decreased by 4.6% as compared to the analogous period of the last year. The Russian market is shrinking, and there are no prospects for our exports there to grow and our earnings increase.

These external factors influence continuation of the devaluation of the Belarusian ruble, and it is hard to say at what speed and when it is going to slow down. It is to depend on what the demand for the Belarusian currency at our exchange market will be. But the National Bank of Belarus is unlikely to be able to carry out an exchange market intervention to maintain the ruble.

- What would you recommend to do to our fellow citizens in order to minimize material losses in this situation?

- So far we are observing the speeding up of the Belarusian ruble’s devaluation, the process of converting ruble deposits to foreign currency deposits is going on. I think that it is going to get faster. And it is reasonable. Among other things, it is a policy of the National Bank. It recommends to do so, in order to lower the rate of interest on ruble deposits.

The pressure on the exchange rate of the Belarusian ruble is to grow, and I think that queues near currency exchange offices could return.

- That is, the situation of the year 2011 could repeat?

- There are preconditions for such situation, though I think that the Belarusian authorities would try to prevent it.

It is alarming that the National Bank had not published the data on the size of our gold and currency reserves for a long time. Recently we have repaid $1 billion for the first issue of Eurobonds. And its sources are still kept a secret so far. If the gold and foreign currency reserves have been used for that, it really has an odour of the year 2011, that is, of a currency crisis.