Unexpected Effect On Belarusian Foreign Exchange Market

The ruble has weakened, but Belarusians are not buying the dollar.

The collapse of the Belarusian ruble against the dollar, euro and Russian ruble led to a rather unexpected result: individuals in September reduced the volume of currency purchases, and legal entities began to sell less, the website select.by writes.

According to the National Bank of the Republic of Belarus, in September 2023, residents of Belarus purchased currencies by $83.7 million less than in August, that is, by $765.1 million. This is the minimum value since May of this year. Moreover, compared to September 2022, purchases decreased by $215.1 million.

This dynamic allows us to conclude that individuals currently tend to purchase currency when it becomes cheaper and reduce demand for it when it becomes expensive. Quite market behavior. At the same time, there is no excitement.

The volume of currency sales by individuals in September 2023 also decreased compared to August: by $53.4 million, to $840 million. But compared to September 2022, the supply of currency decreased by only $26.2 million.

As a result, residents of Belarus in September of this year sold currencies worth $74.9 million more than they purchased. They have been net sellers of currency since January 2023 and have already sold $499.6 million in nine months.

Legal entities - residents of the Republic of Belarus in September decided to hold on to the rising currency, perhaps hoping that its exchange rate would rise even more. In September, they sold currencies on the domestic market of the Republic of Belarus for the minimum amount since May 2020, that is, only $1.732 million. This is $328.1 million less than in August 2023.

Demand for currency from legal entities also decreased: by $173.8 million to $1.987 million. This is the minimum value since April of this year.

Thus, in September, Belarusian enterprises again turned out to be net buyers of foreign currency and purchased it for $255.9 million. This is the maximum value for this indicator since December 2022. And in January-September they bought more currency than they sold, by $824.1 million.

At the same time, legal entities - non-residents of the Republic of Belarus over the nine months of this year sold more foreign currency than they bought, by $1,472 million. But their net sales of foreign currency in September amounted to only $121.7 million, which is the minimum value since April 2022. This indicates that the situation on the foreign exchange market of the Republic of Belarus and the Russian Federation is gradually normalizing.

Non-residents are gradually buying more and more currency in Belarus, and selling it less and less. In September, they sold $29.8 million less than in August, that is, $232.3 million. And non-residents bought currencies by 16.5 million dollars more — for 110.6 million dollars.

Thanks to the sale of currency by non-residents, in the domestic foreign exchange market of the Republic of Belarus there is an excess of the supply of currency from the population and enterprises over demand.

Excess currency is partially bought by banks and financial organizations (excluding the National Bank). In September, they purchased currencies in net terms for $128.4 million, which was ensured by the purchase of cash currency from individuals ($184.6 million). In January-September, financiers purchased currencies worth $827.2 million, with $1,527.9 million in cash.