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EDB: Belarusian Ruble Devaluates Due To US ‘Devastating Sanctions’

EDB: Belarusian Ruble Devaluates Due To US ‘Devastating Sanctions’

Other currencies of the EAEU are likely to face the same destiny.

The Belarusian ruble and other national currencies of the EAEU are updating the lows of recent years, inflation is accelerating in the countries of the Union due to external conditions, experts of the Eurasian Development Bank (EDB) state, interfax.by reports.

"In late August and early September this year, external conditions continued to play a key role in regional financial markets, and increased volatility of exchange rate dynamics was observed not only in the Russian and Kazakhstan markets, but also became more pronounced in Belarus and Kyrgyzstan," says the preamble of the next monthly macro review, which is published by the EDB.

"The Russian ruble, the Kazakhstani tenge and the Belarusian ruble have been steadily updating the lows in recent years, while the macroeconomic background for these currencies remains favorable, as evidenced by an improved balance of budgets and a positive balance of foreign trade," the EDB experts note.

According to their estimates, in August, the expected acceleration of inflationary processes in the second half of this year was evident. "In five of the six countries in the region, there has been an increase in annual inflation - in Russia from 2.5% in July to 3.1% in August, in Belarus from 4.1% to 5.0%, in Kazakhstan from 5.9% to 6%, in Tajikistan from 2.3% to 3.5% and in Armenia from 2.3% to 3.3%, while inflation in all countries continues to be lower or within the targets, "the report says.

The EDB experts warn that "the observed weakening of the exchange rates of national currencies may create additional inflationary pressures in the remainder of the year."

The EDB states that against this background, "a number of central banks in the region have toughened rhetoric regarding further interest rate changes, while not excluding the possibility of tightening monetary conditions."

Meanwhile, the bank’s economists believe that "the new basis of economic policy formed in recent years, based on a more flexible exchange rate, balanced fiscal and monetary components, prevents accumulation of imbalances in key economies of the region and increases resistance to external economic shocks."

They refer to the ratings of rating agencies (Fitch, S & P) "which, despite the expansion of sanctions against Russia, in late August and early September confirmed the sovereign ratings of Russia and Kazakhstan."

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