Stanislau Bahdankevich: Ukraine can prohibit the purchase of unstable Belarusian ruble

Though there is an ongoing war in Ukraine while Belarus is celebrating a twenty-year anniversary of Lukashenka’s rule, Ukraine hryvna is just as unstable as Belarusian ruble.

On July 10 Belarus National Bank sent out a letter with a permission not to purchase Ukraine hryvna in cash. The decision of the National Bank was allegedly taken because of the desire not to worsen the financial situation of Belarusan banks.

What lies behind the decision of the National Bank? Is it economy or politics? Will Ukraine answer to the unfriendly gesture of the official Minsk?

These and other questions EuroBelarus Information Serviceasked Stanislau Bahdankevich, former head of the National Bank of Belarus.

- Belarus National Bank allowed Belarusan banks not purchase Ukraine hryvna in cash. What served as a reason for such decision?

- A certain devaluation of Ukraine’s hryvna is under way. However, it isn’t stronger than the devaluation of the Belarusian ruble. Extremely unstable political and economic situation in Ukraine might cause fears of further devaluation on the part of the National Bank.

But Ukraine currency is quite stable, and personally, I see no reasons to worry.

- Was the decision of the National Bank purely economical or some politics is also involved in it?

- There might be some politics in it; but it is hard to find out.

The war in Donbas is going on, and the economy is almost not working. Donetsk and Lugansk are paralyzed. The situation is difficult, and there are no guarantees that it won’t worsen further.

Perhaps, termination of purchasing the Ukraine hryvna was the right decision to make.

But let me repeat one more time: by June the Belarusian ruble depreciated against the euro by 21 per cent, against the dollar – by 16 per cent. National currency is being depreciated both in Ukraine, where the war is going on, and in Belarus, which is commemorating twenty years of Lukashenka’s rule.

- Can the decision of the Belarusan National bank cause response from the official Kiev – to prohibit purchasing the Belarusian ruble in cash in Ukraine?

Of course, that is what the reaction should be. The Ukraine hryvna is just as unstable as the Belarusian ruble. If Belarus behaves with the Ukraine hryvna in this way, Ukraine can do the same.

In the unstable situation we should deal with the stable currencies: dollars and euros.

- You have already mentioned that the Belarusian ruble is just as unstable as the Ukraine hryvna. What is to become with the ruble in the near future?

- We shouldn’t wait for collapse similar to the one that happened in 2011. Now Russia serves as a certain gold and foreign exchange reserves for Belarus: taking into account the situation in Ukraine, Russia will be trying not to lose Belarus by any means.

Crawling devaluation will continue. However, depreciation of the Belarusian ruble against the euro is less than the depreciation of the ruble against bread, milk, and consumer goods in the domestic market. Devaluation has to be accelerated.