Reduction of deposits

In May foreign currency deposits of the population decreased by USD 464.1 million (by 11.1%) in April they decreased by USD 458.9 million and by USD 40.4 million in March. All in all, over the last three months foreign currency deposits decreased by USD 963.4 million

On 1 June the National Bank reported, the volume of deposits in foreign currency amounted to USD 3.73 billion, decreasing by USD 650.9 million (14.9%) compared with the beginning of the year. In May deposits in Belarusian ruble decreased by Br 959.8 billion (9.5%) after rising to 447.3 billion rubles in April and a decline of 1.185 trillion rubles in March. Ruble deposits at the beginning of June amounted to 9.195 trillion rubles.

On 15 June the National Bank of Belarus announced an increase in bank deposits from 23 trillion rubles as of January 1 to 27.7 trillion rubles on 1 June. However, it is only a manipulation with figures: foreign currency deposits were calculated using new USD exchange rate.

Comment

Reduction of deposits is due to rising expenses (population wanted to buy cars before 1 July), inflationary expectations (avoidance of Belarusian rubles), as well as to loss of confidence in the banking system and economic policies.

By autumn a steady decline in deposits could become a serious challenge to the banking system. Banks are making efforts to preserve the deposits by increasing interest rates, however it would be possible to regain trust only after the situation at the foreign currency exchange market is stabilized (currency will be available at the banks), i.e. after the country gained considerable amount of currency, which the National Bank of Belarus could use for interventions on the Foreign Exchange.