Belarusian Ruble to Follow the Fate of the Russian One

At any time depositors may lose their savings.

The other day after the analysis of the monetary policy of Donald Trump's Administration and effects of new sectoral sanctions against Russia economists concluded that the Russian ruble could face serious "challenges" in the fourth quarter of the year. The collapse scenario of the currency of the eastern neighbor is also possible.

What is waiting on the Belarusian economy then? Barys Zhaliba, Doctor of Economic Sciences, answers the question of Charter97.org:

- If the Russian ruble collapses, that is, sudden devaluation occurs, then the Belarusian should inevitably follow it. The devaluation of the Belarusian ruble will happen in any case, otherwise, Belarus will lose on its export to Russia.

In such a situation the government of Belarus has few behavior models. Suffice it to recall the resignation of the previous head of the National Bank Nadezhda Yermakova, who once said: "We will not run after the devalued Russian ruble". And it was not done but resulted in losses of $500 million on exports.

Considering time frames of the Russian ruble"s collapse, it is hard to predict whether it happens in the fourth quarter. There is a significant potential that tougher financial sanctions are practiced and the Russian economy is increasingly undermined.

However, I think that these processes will occur gradually. I think that due to the gradual effect of sanctions, the Central Bank of Russia will have the opportunity for some kind of maneuver. There are highly-qualified specialists there. Therefore, I believe gradual situation deterioration is more possible.

Anyway, either it is a sudden decline or "gradual" devaluation, the Belarusian ruble will follow the Russian one.

Everybody knows well that both Russian and Belarusian rubles are risky currencies. At any time they can both "betray" depositors and the economy as a whole. It already happened, especially to the Russian ruble.

- Does it turn out that the Belarusian authorities are at the mercy of the devaluation of the Russian ruble?

Yes, it is unfortunately true. There is no "antidote" to the devaluation of the Russian ruble. Belarus is now too closely tied to the Russian market and depends on exports and imports.

Therefore, the National Bank and the authorities are forced to repeat exactly the dynamics of the Russian ruble. Otherwise, the state budget takes huge losses.