Currency Situation In Belarus Becoming Unpredictable

The banking system of deposits is trying to survive in a severe “storm”.

The “500 Bucks Each” meme has long shown that the dollar in Belarus is the main, albeit not official, currency. It sets salaries and rent (of course, at the rate of the National Bank) and, of course, this is the currency people keep a stash in.

It is precisely because of this attachment of the population to the dollar that the changes in the foreign exchange market, which the National Bank is introducing since July 9, look like a threat not only to protesters, but also to people loyal to the regime. The editorial office of the “Busel” decided to take a closer look at all the innovations, as well as track how Belarusians “vote with the dollar”.

THE RATE DANCING ITS TUNE

Since July, the National Bank plans to take control of the work of exchange offices and cash desks, as well as regulate the procedure for setting exchange rates by banks throughout the country. In particular, this applies to the very process of currency exchange. So that there are fewer controversial situations, “the transfer by an individual to the cashier of cash foreign currency, cash Belarusian rubles is considered as the consent of the individual with the conditions for conducting a currency exchange operation, reflected on the stand or a special electronic board.” This means that when a person transfers money to the cashier for exchange, they automatically agree with the rates that are indicated on the bank board. If the rate suddenly changes, the cashier is obliged to immediately stop currency exchange operations until the rates are updated on the board. These innovations apply only to cash exchange of currencies; when buying currency through a bank card, the old procedure remains.

The most serious innovation is currency restrictions, which the National Bank, together with the Council of Ministers, will have the right to introduce.

This is a ban on carrying out foreign currency and foreign currency exchange transactions, setting limits on the volumes, number and timing of foreign currency and foreign currency exchange transactions, as well as on the currency of payment, reserving a part, the entire amount, or an amount that is a multiple of the entire amount of the foreign currency exchange transaction. The National Bank can introduce a requirement to obtain a special permit from it for carrying out currency transactions, as well as obligatory force legal entities to sell all the proceeds to the state. The international agenda was also touched upon: now the main bank of the country may limit the possibility of opening accounts in foreign banks for Belarusians and residents of the country (it’s curious how they plan to receive this information).

It's funny that in the same amendment, the National Bank allowed individual entrepreneurs and legal entities to open accounts in foreign banks, buy shares and real estate abroad without the consent of the National Bank. An extremely convenient scheme is to allow, then to deny later if necessary. It also introduces the mandatory registration of a number of foreign exchange contracts, otherwise there will be a fine.

TAKE IT AWAY WITHOUT HESITATING

Such innovations could not but affect the currency situation, which has been deteriorating in the country every day since August 2020. So, as of May 2021, Belarusians took 44% of foreign currency deposits from banks.

The amount of dollars in foreign currency deposits is less than 1.3 billion. The outflow of deposits has been observed for fifteen months, during which the Belarusians took almost two billion dollars. Only in August last year, the population took deposits worth $ 624.3 million.

It should be noted that foreign currency deposits in Belarus are not a real investment. Due to the low rate of a couple of percent (at best), deposits in foreign currency are perceived more as free storage with a small profit - not everyone is ready to keep large amounts at home.

In general, the Belarusian system of deposits has been “under storm” for several years already: the introduction of irrevocable deposits and income tax even before political events alarmed part of the population. Now, when the situation with the currency is catastrophically worsening, banks are trying to at least increase the money supply in the national currency. Here, deposits for several months entered the scene at a cosmic 18% per annum, from which, of course, you will also have to pay a thirteen percent tax. Tempting figures, of course, and they can bring profit, but the risk of losing money, given the situation, is also great. Plus, each such contribution is, albeit not direct, but still support for the regime, which is doing everything to deprive Belarusians of economic stability to please the desires of a particular person.

What to do with money, where to store it and in what currency is undoubtedly everyone's personal choice. However, in the current situation, when the collapse may come out of the blue, it is necessary to weigh all the risks and try to keep the existing assets without losses.