English

Rubel's exchange rate band widened to 12%

The National Bank of Belarus (NBB) on May 5 widened the fluctuation band for the Belarusian rubel against a basket of foreign currencies from eight percent to 12 percent.

The eight-percent fluctuation band was set by the 2011 Monetary Policy Guidelines, which were authorized by a presidential edict.

When reached by BelaPAN, NBB spokesman Anatol Drazdow said that the decision had been made as part of efforts toward securing a single exchange rate in different segments of the foreign exchange market, expanding the NBB's capability of reacting to fluctuations in currency cross rates and achieving a more flexible exchange rate policy in general.

He said that no presidential edict had been issued for making appropriate changes to the 2011 Monetary Policy Guidelines.

The decision means that the National Bank is now free to devalue the rubel against the basket of the US dollar, the euro and the Russian ruble by four more percent.

The widening of the exchange rate band came weeks after the National Bank abolished the requirement that banks buy and sell foreign currency from and to economic entities at an exchange rate deviating by no more than 10 percent from the official rate, lifting all currency exchange rate restrictions in the interbank market.

A few days later the NBB said that it expected the Belarusian rubel to resume to be exchanged at a single exchange rate in May and foreign cash may then be again available at banks’ exchange outlets.

Foreign cash is in short supply in currency exchange outlets at present. Those lining up at currency exchange booths can buy only what others sell, but few are willing to sell foreign cash to banks at what many see as a very low exchange rate.

The US dollar's rate is by up to 50 percent higher than the official rate in the black market and is even higher in the interbank market, where foreign cash is traded exclusively by businesses.

The International Monetary Fund and Russia have urged the Belarusian government to allow more flexibility in the exchange rate of its currency.