Economists Predict Another Devaluation

If Russian ruble falls, Belarus will have to automatically devalue its national currency.

Belarusian currency exchange rate was at a record high yesterday. One USD dollar cost less than 1.9 rubles at currency exchange market.

The famous economist Lanid Zaika commented on the situation on the Onliner.by website.

– Many has considered this event to be significant, so to say, the turning point, indicating that positive processes are going in the country's economy. I do not want to disappoint such people, but in my opinion, this is not true.

In fact, quite simple things are happening. GDP fell by 40% in Belarus since 2014. This means that our country produces 40% less goods in dollar equivalent. Income and purchasing power of the population have also decreased (by 7% during the last year only). Naturally, the country's population requires less imported goods, and enterprises do not have the money to purchase foreign currency in the previous volume. All this affects the imports, which fell somewhere by 12%.

As a result of decline in economic activity of enterprises and population, the demand for currency is also falling, and it is today the main, the dominant tendency. This is indicated, for example, by the fact that last year ordinary Belarusians sold about $ 2 billion more than they bought. To put it simply, incomes fall, which means consumption falls as well, the average check amount in the stores reduces, the demand for currency, which people buy on free money, falls as well.

I remember that only recently people were queuing for Italian grapes in hypermarkets; now there are no queues.

In addition, it is necessary to take into account the denomination, which took place in July, and that the amount of money in circulation has decreased by January of this year. So you can be glad the Belarusian ruble has strengthened, but it is worth bearing in mind that this occurs partially due to the fall of purchasing power.

Besides that, it should be taken into account that a significant number of transactions involving Belarusian capital takes place in the Russian market. It is now being revaluated, which by the way, has also contributed to the strengthening of the Belarusian ruble, but has worsened our position regarding the sales of goods in Russia.

However, it would be unwise to fully rely on the growth of the Western partner. We should not forget about the danger of devaluation of the Russian national currency. If this happens, then we will have to automatically, regardless of our will and desire, devalue the Belarusian ruble too. The first quarter of this year will show which tendency will prevail, it's too early to speak about something after the first month. Answering the question, how long the strengthening of the Belarusian ruble will continue in the future: it is quite likely, it will continue as long as the financial situation of households will continue to deteriorate, and until the Russian ruble weakens.