Devaluation of the Belarusian ruble in 2015. What is the devaluation of the Belarusian ruble and how does it threaten the population?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Considering the question of what is the devaluation of the Belarusian ruble, let's start with the fact that the currency of Belarus in the past few months has shown a sharp appreciation in the basket of currencies. In parallel with the phenomenon, there was a significant depreciation of the monetary unit against the dollar and the euro. According to experts, the economy of the state itself and the world as a whole became a prerequisite for such a situation in the country. In the period from January to November 2014, the strengthening of the Belarusian ruble occurred on average by 2.25% against the background of the euro, dollar and Russian ruble. The reason for this is the fall of the Russian ruble and the exit of the euro currency to the international market. If last year the question of whether there will be a devaluation of the ruble was asked by many, today the answer to it is quite obvious. There will be, and not alone.

Where do fears come from?

In accordance with the information provided by the National Bank of the Republic, since the beginning of 2015, the depreciation of the national currency against the US dollar was 1.92%, and against the euro - 2.46%. And everything would be fine, but the population of the country is used tomeasure the level of their we alth in US currency. As mentioned above, there was a strengthening of the monetary unit against the Russian ruble by about 18%. This fact does not change the devaluation sentiment. Ever since 2000, it has been customary to make forecasts and keep savings in dollars. This trend is pushing for the fact that the devaluation of the Belarusian ruble in 2015 will still make itself felt. According to analysts, it is the National Bank that regulates the exchange rate in the country, it is he who systematically reduces the value of the ruble.

What will lead to devaluation?

Considering the question of what the devaluation of the Belarusian ruble is, one cannot but pay attention to the causes of the phenomenon. The situation is due to the fact that as a result of the decline in the global economy, the country stopped buying foreign currency in the volume in which it bought earlier. Consequently, the inflow of dollars does not block the outflow of currency from the state. Demand exceeds supply. The difference is covered by borrowing. This causes a gradual fall of the national currency. The absence of factors that could radically change the situation only indicates a continuation of the trend. The lack of hard currency in the country indicates a significant revaluation of the Belarusian currency against the US dollar, which in July 2014 was at the level of 20-30%. With a high level of inflation, the goods of the state are actively growing in price in international markets, imported goods become more attractive to the citizens of the country. An increase in the imbalance leads to the need for the state to start devaluing the ruble in order to eliminate disharmony within the framework offoreign exchange market.

Hard peg to the dollar is one of the reasons for the phenomenon

Due to the tight peg of the Belarusian ruble to the dollar, as noted above, there is a strong imbalance in foreign markets. While the national currency is getting cheaper against the dollar, it is getting stronger in comparison with other currencies of the world. The government decided to send the exchange rate to free float, as it is no longer possible to maintain stability in this sector. Even before the crisis, the policy of the Central Bank was aimed at reducing the value of the currency within 1% per month. The elimination of the fixed exchange rate should help solve problems with exports. The increase in external debt, the destabilization of the banking system are just temporary phenomena that will eventually become a thing of the past.

What is the root of the problem?

In order to understand the question of what is the devaluation of the Belarusian ruble, you must first make an assessment of the economic situation. Preliminary data suggest that by the end of 2015 the devaluation of the national currency will reach 40-50%. One of the main reasons is an exponential increase in crisis phenomena in the nearest neighbor, Russia. The country is more than 60-70% dependent on Russia, therefore, it will be more difficult to build partnerships every time. The modern crisis differs from the problems of the past in that it is shaped by several factors. These are not only internal reasons, but also external ones, such asEU sanctions and falling oil prices. The credit rating of Russia is the last investment place and a pre-speculative level. The capital market for the neighbor of Belarus is closed, the cost of money is growing, the neighbors are not becoming more generous. At the same time, the cost of money increases for the Belarusian business. Today, the refinancing rate in Russia is 8.25%, and in Belarus - 25%. These indicators will rise as long as the price of oil falls and as long as sanctions are active. The circumstances described above will directly affect every citizen of the country through the exchange rate of the Belarusian ruble. The forthcoming elections in the country may make significant adjustments to the development of events.

What do forecasts for 2015 say?

The question of whether there will be a devaluation of the ruble or not has already disappeared, but its volume can be questioned. The indicator at the level of 40-50% pleases few people. Problems may arise in such sectors of the economy as retail and the financial sector, real estate, and other areas focused on the end consumer. President Lukashenko at a press conference spoke about the urgency of freeing the ruble due to the currency panic of the population. The government's plans never included a devaluation of the ruble, and mortgages were always supposed to remain affordable. This decision is due to the fact that the government intends to keep its gold reserves. The open policy of Belarus could not but feel the crisis in Ukraine and Russia. Despite the panic, the course is being monitored today. There are no plans to change the economic model. Moreover, it was statedthe public that the reasons for the devaluation of the ruble in 2015 are multilateral, fortunately, over time, the situation will change dramatically.

Devaluation expectations

Devaluation expectations in society have an impact on the increase in inflation due to the demand for currency and goods. The growth of the population's need for dollars, euros, and even rubles is curtailed by additional devaluation. This accelerates inflation. At the end of 2014, in order to bring down the demand for foreign currency, the government introduced a commission on the purchase of foreign money in the amount of 30%. After the hype fell, the percentage began to be canceled in increments of 10%, which in parallel was accompanied by a fall in the value of the national currency by at least 7% each time. It was a step of the state towards businessmen. The currency exchange interest was offset by the fall in the value of money.

What happens next

If the situation in the country continues to develop in this format, in the near future the question of what the devaluation of the Belarusian ruble means will be replaced by the expectation of rising inflation. This will cause an increase in deposit rates, which will increase the country's population's desire for savings. There is practically no doubt that the devaluation of the ruble-2015 will continue for more than one month. What should people do in this situation? Do not panic. This would be the most rational way out under the circumstances. Loose monetary policy can lead to the generation of one inflation into another, thus forming an inflationary spiral. If the phenomenon takes place, the governmentfirst of all, attention will have to be paid not to business and private households, but to low-income segments of the population.

Devaluation at the end of 2014

The question of what the devaluation of the ruble means did not bother the public much at the end of 2014. This is due to the fact that the phenomenon could not have been avoided. The reason for this was the problems faced by Russian exports. Subjective and psychological factors provoked panic. In just one day, namely on December 18, Belarusians bought foreign currency in the amount of 80 million dollars, which is many times more than the average amount. Back in the autumn of the same year, the volume of foreign currency purchases did not exceed $5 million. The authorities almost immediately took drastic measures and decided to let the course float freely. Compared to 2011, when the country's leadership did practically nothing, the reaction was prompt.

What did the depreciation of the currency in the market lead to?

Let's consider what the devaluation of the ruble-2015 led to. What to do, everyone will decide on their own, but the consequences of the phenomenon can be assessed. A significant benefit as a result of the situation went to exporters. At the same time, one should not expect a big push, because the main consumer of Belarusian goods is Russia (more than 43% of exports), and it is currently experiencing a decline. Economic growth is blocked by bank interest rates, which have become completely unaffordable for business entities. Many, considering the question of what the devaluation of the ruble means, talk abouta drop in their earnings in dollar terms. Due to the pegging of the national currency simultaneously to the dollar, euro and ruble, there is significant instability. The devaluation of the ruble and mortgages on acceptable terms are practically incompatible concepts. Today, the exchange rate of the national currency has become an indicator of the state's economy, a symbol of its unstable state.

What does the situation in the country say and is everything so bad?

The economic growth in Belarus increased 1.6 times in 2014. In 2015, GDP growth is expected to be 0.2-0.5%. Wage growth is expected in connection with the upcoming presidential elections. Devaluation is also associated with a reduction in financial assistance from Russia. Statistics show that during the first devaluation, citizens of the country purchased about 48,000 cars in Russia, despite the fact that offers for the purchase of vehicles in the country are more profitable. The expenditure of funds amounted to about 500 million. The government spent 760 million to maintain the exchange rate of the national currency, which led to a reduction in gold reserves to 5 billion. Demand for the currency prompted an increase in the rate and a further freeze in lending. The cost of food, medicines and tariffs of state enterprises was frozen. Over-the-counter currency transactions were taboo until 2017. Having considered the question of what threatens the devaluation of the ruble to the population, it is worth mentioning the change in rates on loans and deposits. They were completely tied to the national currency.

What does the future hold for us and what obligations has the country assumed due to the fall in the ruble price?

In 2015, the state must fully pay off its foreign debt, which is about 3 billion. The allocation of funds from the budget for settlements with partners should not have an impact on the reduction in demand. Help from Russia in material terms, although it will open the flow of imports, will not completely solve the situation. The problem in the banking sector will remain unresolved during the year. This is due to the fact that foreign assets are located in the negative zone. Only bets of 50% or more can get rid of losses on withdrawn deposits. Having studied the question of what the devaluation of the ruble means for Belarus, we can say that this process is more than usual for the country. Since 2000, the exchange rate of the national currency has sagged by about 10% in just a week at least 5 times. The rate is under pressure from increased demand for imports, wage growth significantly exceeds production at a fixed rate. The economy is constantly fueled by soft loans and subsidized construction. Devaluation was never used to eliminate problems, as it was always followed by decrees to increase wages. Thanks to Russia's support, the country's economy has never sunk into a deep hole.