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Barys Zhaliba: Sharp devaluation is evident

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Barys Zhaliba: Sharp devaluation is evident

Economist Prof. Barys Zhaliba speaks about the rapid fall of the Belarusian ruble.

“The fact of a sharp devaluation is evident. Almost the same happened last December, when the Russian ruble began to fall and the Belarusian ruble held for some time and dropped 30%,” the economist told Salidarnasts. “The main reasons for today's fall are external. We see oil prices declining, and the process goes on. It provoked the slide of the Russian ruble, because Russia's export, perhaps, 50% depends on oil. As our economies are interconnected, we can definitely say speak about the Belarusian ruble drop.

However, we can also find reasons for the devaluation in our economy. For example, the National Bank seems not to emit much money, but it released several bond issues, which are meant for free rubles in commercial banks. It means we had excess ruble liquidity. It means that the National Bank has to take more measures. Another example is that National Bank too actively recommended banks to reduce interests rates on ruble-denominated deposits to make loans for the real sector cheaper. We can say that it was made in an administrative-command order.

As a result, customers began to transfer funds from deposits denominated in Belarusian rubles to foreign currency deposits, thus putting additional pressure on the ruble rate.”

Barys Zhaliba thinks the National Bank has instruments to soften the blow of the Belarusian ruble fall, but it won't be easy to do it due to external factors. Much depends on how oil prices will change further.

The economist says it's becoming more and more obvious that keeping money on ruble deposit accounts makes no sense.

“A sharp devaluation is followed by a period of rapid inflation. So, I would keep all savings in foreign currency.”

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