Belarus on Tuesday effectively allowed the Belarussian rouble to devalue by 10 percent, in a move that analysts say could help it secure bailout loans but would not by itself fix an unsustainable foreign trade gap. The Belarussian rouble has come under pressure from the country's big trade deficit and increased spending by the government in the run-up to the December presidential election, when President Alexander Lukashenko won a fourth term.
To plug the gap, Belarus has asked Russia and other ex-Soviet nations for $3 billion in loans. Moscow says it wants to see credible adjustment proposals before it considers emergency help. The Belarussian central bank said local banks were now able to trade more freely on the over-the-counter market which should account for up to 70 percent of total foreign exchange turnover.
"Banks have been allowed to buy and sell foreign currency to other banks and customers at rates deviating from the official rate by no more than 10 percent," it said in a statement. The central bank, whose forex reserves fell 20 percent in the first two months of this year to $4 billion due to the trade deficit, had previously allowed banks to deal at only 2 percent above or below the official rate. This tight restriction would remain in place for exchange points dealing with retail customers, it said. Analysts said the move - urged by the International Monetary Fund - could be taken as a positive signal by markets, where Belarus Eurobond yields have surged since the start of this year. "The widening of the corridor, in essence, means a 'soft devaluation' of the Belarussian rouble," said Alexander Kudrin, head of fixed income research at Troika Dialog.
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