Belarusians have prepared for currency devaluation

Country’s population is actively expressing mistrust to the national currency.

These are not best times for Belarus’ financial market. Negative trends in the currency market that we observed in September remained there in October as well. Population’s reluctance to take money to banks, the increase in foreign currency deposits, mass increase in consumer loans in the national currency are the obvious symptoms of mistrust to Belarusian rouble, BelaPAN reports.

Dollarization of deposits in October

Belarusian banks keep raising the rates on deposits in the national currency. Belarusbank, Alfa Bank, Paritetbank have brought the rates on rouble deposits up to 49-50%. The remaining trend of raising the interest rates on deposits in roubles is not surprising: the population is not burning with desire to take roubles to banks.

October showed that only the banks that set the highest profitability for rouble deposits (at the level of 49-50%) could see the increase in fixed period deposit made by the population.

For example, Belagroprombank, which had set the profitability rate of 49% on national currency deposits as early as in the first half of October, managed to significantly increase the amount rouble deposits.

At the same time other large banks (Belarusbank, BPS-Bank, Priorbank, Belinvestbank), which had lower interest rates, had to state that the amount of fixed time deposits in roubles decreased in October as compared to September.

It is indicative that foreign currency deposits increased in October as compared to September in all large banks, despite the low interest rates. The increase in foreign currency savings and the simultaneous decrease in national currency deposits is an obvious manifestation of mistrust to the Belarusian rouble on the part of the population.

It should be noted that in the current situation Belarus’ National Bank is trying to reduce the tension in the financial market by implementing tough monetary and credit policy aimed at supporting the attractiveness of deposits in Belarusian roubles and at reducing the pressure on the currency market.

According to bankers, the National Banks is constantly working with banks on reducing the amount of issued loans, and provides cash positions only to a limited number of banks. Such a policy by the regulator leads to the lack of rouble liquidity, which causes banks to attract the population’s rouble savings and hence are ready to increase interest rates on deposits.

“The actions of the monetary authorities are completely justified in the current situation and respond to the current moment in time. Softening of the money and credit policy is only possible on the condition that a favorable situation in the domestic currency and deposit markets is reached”, - BusinessForecast.by’s financial analyst Aliaksandr Mukha comments on the situation.