What Will Happen To Dollar Exchange Rate In Belarus?

There are two scenarios prepared by the government for events in the foreign exchange market.

This year the population sells foreign currency at large amounts. A significant excess of foreign currency supply against demand has ensured the stability of the exchange rate of the Belarusian ruble. What will happen next?

There are two scenarios prepared by the government for events in the foreign exchange market.

The rate for the end of 2017: the government placed its bets

The Belarusian parliament has already begun to consider the forecast documents on 2017. The voiced budget parameters make it clear that a large devaluation of the Belarusian ruble is not expected in the future. Nevertheless, variations are possible.

When assessing the dollar rate for 2017 the authorities have judged primarily from the external environment. Internal factors should have, according to the plans of authorities, only a beneficial effect on the Belarusian ruble exchange rate in the near future.

According to BelaPAN, in 2017 the National Bank plans to maintain the current monetary policy aimed at restriction of money supply. It is assumed that the average broad money supply will grow by 14%. Accordingly, there is no reason to expect that the uncontrolled emissions will lead to a sharp weakening of the Belarusian ruble exchange rate.

If the plans are implemented, the behavior of the population should promote a positive effect on the dynamics of the Belarusian ruble exchange rate.

According to BelaPAN, in 2017 the authorities expect that a stable foreign currency excess supply will remain, and it will also promote the increase of foreign exchange reserves by half a billion dollars.

At the same time, it is not planned to spend reserves to maintain the exchange rate; currency interventions to be used in exceptional cases to smooth out short-term fluctuations of the exchange rate.

Thus, according to intentions of the monetary authorities, there should be no accumulation of devaluation potential as a result of an artificial maintenance of the Belarusian ruble.

In general, there are still no internal factors for the sharp weakening of the Belarusian ruble.

But external factors, according to state experts, will have an impact on the currency market.

According to BelaPAN, the government's assessment indicates that when the average world oil price equals to $35 per barrel dollar may be traded Br2.21 in the end of 2017. At the same time, if a more favorable scenario takes place and a barrel of black gold will be traded at $45 next year, then the dollar rate may equal to Br2.12. It will be recalled that now dollar costs Br1.96.

The population does not jeopardize the ruble

This week Deputy Finance Minister Yury Seliverstau informed that the budget for the future year was based on an average oil price of $35 per barrel. To take this scenario, close to the pessimistic one, as a basis, they've decided not to sequester the budget-2017, like it has been done with the current one.

Meanwhile, this week the price of oil on the world market exceeds $45, and now is close to $50. The growth of world oil prices, which took place in August, has made Russia to start thinking about the revision of the oil price forecasts.

The Minister of Economic Development of Russia Alexei Ulyukayev said that the agency along with the basic scenario ($40 per barrel) considered the scenario (the "basic plus") with the increase of oil prices to $50 per barrel in 2017 realistic.

"If the oil will rise in price on the global market next year, as some foreign experts expect today, to $50-60 per barrel, there can happen the strengthening of Belarusian ruble exchange rate against this background", financial analyst of Forex Club Valery Palkhouski says.

It is known that the Belarusian ruble exchange rate today strongly depends on the course of the Russian one. According to Russian Ministry of Economic Development, when the world oil price of $40 per barrel, in 2017 the US currency will cost 65 Russian rubles, when the average annual oil price of $50 per barrel - 61 rubles.

"If the dollar exchange rate in Russia equals to 60 Russian rubles, in Belarus it may cost even less than now. In this case, the official dollar exchange rate may fall to the level of 1 ruble 85 kopecks," he suggested in the interview to BelaPAN.

Belarusian financial market analysts believe that the National Bank will not put influence on the dynamics of the ruble exchange rate, which is formed under the influence of external factors.

"Until 2014 Belarus attempted to fix dollar exchange rate at a certain point, which led to an inevitable devaluation of the national currency. Since the beginning of 2015 the dollar has not been targeted in Belarus, its dynamics reflects figures that are naturally formed on the market", financial analyst of Alpari Vadzim Iasub says.

According to him, amid the relative stability of external factors in 2017 dollar should not cost more than 2 rubles 22 kopecks.

"Both presidential and parliamentary elections are over, and no one will be going to raise the income to solve populist problems.

There are no grounds to state that there will be an increased demand for foreign currency among population, which could negatively affect the Belarusian ruble exchange rate," Vadzim Iasub believes.

He reminds that this year the population massively sells foreign currency reserves. The growth of real disposable income in 2017 is planned only at 1.2%, it is expected that the Belarusians will continue to sell currency to maintain their living standards.

"If the National Bank's plans towards restriction of the money supply are implemented, if wages grow slow, the devaluation will likely be moderate. This forecast of authorities looks realistic", Vadzim Iasub summed up.

Dmitry Zayats, Belorusskiye Novosti