National Bank intends to maintain smooth devaluation policy until New Year

In late October, the National Bank managed to demonstrate growth in Belarus’ gold reserves. Amid devaluation of the Russian rouble, the National Banks’ main objective until late 2014, is to preserve the gradual devaluation pace for the Belarusian rouble against the US Dollar. In 2015, Belarus will keep the duties on petroleum products and will have a greater supply of oil products, which will help her to cope with external debt and meet the forecasted BYR/USD exchange rate.

According to the National Bank, on November 1^st, Belarus’ gold reserves totalled USD 6 022 million, i.e. increased by USD 18.1 since October 1^st. The National Bank was able to demonstrate a small increase due to small foreign debt payments in October and by using assets not included in the GCR. The approximate volume of losses in non-reserve assets is estimated at USD 470 million. The total volume of available non-reserve assets, which, if necessary, could increase the GCR is approximately USD 700 million (as of November 1^st).

The National Bank is particularly concerned about the devaluation of the Russian rouble. Since early 2014 the Russian rouble has devalued by 45% against the US Dollar, which has considerably reduced Belarus’ export potential on the Russian market. The National Bank has been deliberately ignoring the RUR/BYR exchange rate, since the Belarusian population is more US Dollar-oriented – when sudden exchange rate fluctuations occur, they quickly convert their rouble savings into foreign currency (US Dollars). The National Bank cannot count on new guaranteed proceeds and does not want to create panic on the currency market, particularly not in the pre-election period. Therefore, it is doing everything possible to demonstrate the sustainability of the Belarusian socio-economic model.

The National Bank aims to demonstrate the immunity of the GCR by early 2015. As of January 1^st, 2015, Belarus will retain the entire volume of duties on petroleum products produced from Russian oil in her budget. Russia will have limited opportunities to issue loans to Belarus. In addition, Belarus might increase imports of Russian petroleum products, in order to sell them on the domestic market, while the same volumes of oil products produced at Belarusian refineries would be exported to the external markets. This scheme would enable additional proceeds to flow into the Belarusian budget, guaranteeing the Belarusian rouble’s stability in 2015.

The National Bank will continue to spend the available reserves in order to maintain stability in the Belarusian foreign exchange market. In 2015, Belarus will not receive direct credit support from Russia, but indirectly, such support could be rendered by Russia through increasing the tax-free supplies of petroleum products.