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Belarusians’ savings flow into economy

Negative foreign trade surplus is growing, putting pressure on BYN exchange rate. Exporters need the weak national currency too so experts predict further devaluation.

The situation at the currency market looks relatively stable for now. During last week the Belarusian ruble became slightly stronger in comparison with the dollar and euro – by 1,5 and 0,9% respectively but got slightly weakened in comparison with the Russian ruble – by 0,1%.

 

The population is not capable of saving the ruble.

The key factors that define the dynamics of the national currency at the Belarusian currency market, like at any other, are supply and demand. The statistics says that this year the population make demand by actively selling the foreign currency, meanwhile supporting the national currency. According to the latest data from the National Bank of Belarus in the first half of the year the currency sale’s made 634,2 million dollars in equivalent. Earlier experts expressed their opinion that our citizens don’t want to limit themselves but want to sustain their level of life and spend their savings, taking into account the decrease in income.

Though the organizations form big demand: in January – July they bought more 143,5 million dollars than sold. The reason of this is the negative foreign trade surplus. According to the data of the National Bank, it was 332,9 million dollars during January –May. In addition, the minus has been stably increasing since February. The lack of the company’s currency receipt is compensated by the currency purchase.

The demand for foreign currency is formed by the National Bank. “In the recent months the regulator stably has been buying the foreign currency”, – stated an expert Zhanna Kulakova of the  on 13 July at the press conference in Minsk.

In her opinion, it is a benefit for the economy because the Belarusian goods must be ready to compete at foreign markets to develop export. Prices for the goods for foreign customers are getting cheaper while the ruble is weak. That is why, while buying the currency, the National Bank  creates additional conditions for changing the situation with the international trade.

No doubt while there is negative foreign trade balance, the ruble is weak and it can’t be otherwise. Moreover, the currency bought by the regulator goes to sustain the level of the country’s gold reserves.

So, the population sell the currency, and the business entities and the National Bank buy. As a result, the total demand for the foreign currency is higher than for the supply and the Belarusian ruble is getting weaker.

Now there are no obvious conditions for improving the situation. “Taking this into consideration it is possible to predict that the current dynamics will hardly change and the Belarusian ruble , thanks to the inner factors, will keep on losing 1-2% per month till the end of the year” , – supposes Zhanna Kulakova.

 

A way out not to depend on oil

We shouldn’t forget about the outer factors. The Belarusian ruble depends a lot on the Russian one, which focuses on the oil maket.

At the end of the week the quotes kept on balancing at the level – 47 dollars per barrel for Brent brand. The pressure on the prices was put by the data given by the EIA according to which during last week the crude oil stocks were cut by 2,55 barrel, and the gasoline reserves increased by 1,2 million barrel, moreover, there was a slight increase in the oil extraction – 57 000 barrel per day. Also the supply of raw materials got restored from Canada and Nigeria.  As a result, there is still oversupply in the market.

Nevertheless, experts don’t see the potential either for future decrease, or for the growth of oil quotes. “Now the normal rate for fluctuations for the prices is 45 – 55 dollars”, – thinks the head analyst of Forex Club Valery Polhovsky.

The analyst of TeleTrade Moscow Mark Goyhman denies the possible decrease in prices to 30 dollars per barrel for Brent oil brand. He explains this by the growth of demand for oil : next year OPEC predicts increase in total demand for more than 1,2 million barrel per day.

The recent months the ruble’s exchange rate in the smallest degree correlates with the dynamics of oil quotes. First, there is politics led by the Central Bank of Russia. “First goal for today is not the exchange rate’s politics but the fight with inflation”,- said Mark Goyhman.

According to the data of the Central Bank of Russia, during the half of the year the inflation at an annual rate has become 7,5%. The goal till the end of the next year is inflation not more than 4%. To reach the goal we need the stable exchange rate. “This is why The Central Bank of Russia doesn’t make the ruble weak, even when the oil gets weak”, – Mark Goyhman is convinced. In his opinion, support of Russian currency and geopolitical factor – make stronger Russia’s influence in the world.

It is the results of the Britain’s referendum that added uncertainty and increased volatility at outer financial markets. We will remind you that the situation has made the foreign investors pay attention to the Russian market where the rates on assets are much higher than in Europe and it means that there are more ways to earn money.

The stability of Russian currency system supports our system as well and it allows to hope for the normal end of the year for the Belarusian ruble” – resumed an expert-analyst of the official partner of TeleTrade In Belarus Michael Grachev.

About Yuri Drazdow (66 Articles)
Yuri Drazdow is the founder and owner of The Minsk Herald. He is also a journalist specialising in area of business and politics. He has degrees in Journalism and Software Engineering and has been working on media and IT projects in Minsk and London.
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