Currency records will be broken with frightening regularity.
Recently the U.S. dollar has broken a historic record in Belarus. There are other signs that the financial stability in Belarus is under threat. Charter97.org spoke to economist Leu Marholin about the situation at the currency market in Belarus.
- How would you comment on this fact?
- There is only one way to comment on this fact - unfortunately, objective laws, these records will be broken with alarming regularity.
- What are today's grounds for talking about a further downward trend of the Belarusian ruble?
- The rate of the Belarusian ruble depends on the ratio of the money supply and the volume of goods and services. If the amount of goods and services decreases or the money supply grows, the Belarusian ruble rate inevitably falls. The mass of goods and services decreases because the production of goods and services decreases and the demand for Belarusian goods falls, or their quality falls. In the case of the money supply, it is growing because there is a need to pay wages. First of all, to state employees, the riot police, for example, and law enforcement officers, and pensions have to be paid as well.
A small increase in the budget, which we achieved by raising taxes - these are mere kopecks, they do not solve the fundamental question. Therefore it is right to expect that new money will be printed; accordingly, inflation will increase and the Belarusian ruble exchange rate will fall.
- The relative stability of the national currency has long been provided by the floating exchange rate and relative independence of the National Bank. Are there any grounds to say that the National Bank has already been put under pressure by the authorities or will be put under pressure in the future?
- Such pressure has been put for a long time, since late last year. To all appearances, the National Bank has managed to resist this pressure from the authorities until recently. How are things now? It's hard to say so far. We'll learn it soon, when the National Bank publishes the volume of the money supply.
The ruble may fall due to a reduction in the commodity supply. IT companies are leaving, businesses are relocating, sole traders are closing. In any case, the result is the same - the ruble is falling.
- In 2011 and 2015, the authorities were messing with the situation on the foreign exchange market, which led to irreversible consequences. Do you think there is a danger that there will be intervention and a repetition of these scenarios in a critical situation?
- If we consider an intervention, like the Belarusian ruble crash in 2011, most likely, it is not likely to happen, because the Belarusians have learned by bitter experience. Today we are witnessing the situation when they raise petrol by a kopeck, and the ruble will be lowered gradually, so it did not cause stress, which may result in some street protests.
In the case this is the introduction of some restrictions on personal accounts of citizens, especially foreign currency accounts, we can see that this is already happening today. The press has also written about it, that the amount of cash withdrawn from ATMs, which is considered not to be suspicious, has been considerably reduced. This is the early sign and then there may be restrictions not only on what is regarded as suspicious but also on the directive restrictions concerning the ruble and the currency. It might be even more radical with regard to the currency; the authorities might prohibit the withdrawal of currency from accounts for a certain period of time. I think we are at the very start of this long journey.