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National Bank rumored to be considering broader exchange rate band for cash market

The National Bank of Belarus (NBB) may expand the foreign currency trading band in the cash market in a couple of days, a source in the country’s banking circles told BelaPAN on Wednesday.

The band may be expended from two to 10 percent, which means that banks will be allowed to buy and sell foreign currency from and to individuals at an exchange rate deviating by up to 10 percent from the official rate.

The NBB press office would not comment on the report.

On Thursday, the official rate was 3,045 rubels per one US dollar. If the band is widened, the margins within which exchange rates may fluctuate with reference to the official rate will be 2,741-3,350 rubels in the cash market compared with 2,984-3,106 rubels at present.

Foreign currency is in demand in the country`s cash market following the National Bank’s order that banks may sell individuals only the foreign cash that they have bought in the cash market.

On March 29, the NBB expanded the band to 10 percent for the interbank market.

Commenting on its decision, the NBB said that it expected the market to become the "most liquid" part of the country`s foreign exchange market that would satisfy economic entities` demand for foreign cash "on market principles" and in full.

The NBB noted that the decision would encourage exporters to sell their foreign-currency proceeds in the market, help banks satisfy businesses` demand for foreign cash and "contribute to the creation of conditions needed for boosting the state gold and foreign exchange reserves."

Banks complained earlier that foreign currency was in short supply in the interbank market as exporters were reluctant to sell foreign cash amid rumors of the Belarusian rubel`s coming devaluation.