Vadzim Iosub: Belarusan ruble will continue falling; without loans we will live for six months more

The situation isn’t hopeless now; however, without attracting foreign loans relative calmness in the Belarusan economy will end when 2016 starts.

Belarusan ruble is jumping up and down again. What will this situation end in? Vadzim Iosub, senior analyst of “Alpari”, answered the questions of the “EuroBelarus” Information Service.

- Generally, a lot depends on the processes that are happening in the world economy. What we see recently is daily renovation of absolute dollar and euro peaks against the Belarusan ruble, which is, first of all, the consequence of the fall of the Russian ruble. And that, due to the mechanism of our currency basket, is, basically, automatically revealed at the rate of the Belarusan ruble. In its turn, Russian ruble is falling due to decrease of prices on oil and, namely, there are few positive prognoses. If prices on oil continue falling, Belarusan ruble will also be falling against the dollar and the euro.

- A number of Belarusan analysts are already forecasting an exchange rate of up to 100 Russian rubles against 1 dollar in the nearest two-year period…

- In fact, it is quite hopeless to make forecasts for the forthcoming two years, since on the one hand, no one can tell what is to become with prices on oil after such period; on the other, apart from oil, geopolitical factor has great influence on the Russian ruble: situation around Ukraine, Western sanctions, etc. So the talks about the situation in the future are at least irresponsible.

- Let’s get back to our ruble. Apart from the troubles with the neighbor’s currency, there is also request for loans, but Belarus didn’t even receive those $3 billion that the government asked from the Eurasian Development Bank through the Eurasian Stabilisation and Development Fund. How can this factor affect Belarusan ruble?

- Of course, such factor is present. But however strange it might seem, now internal factors have less importance than world factors. The most objective evaluation of the price of Belarusan ruble is currency basket; but despite the fact that dollar and euro reach new peaks, from the point of view of currency basket Belarusan ruble is now stronger than it used to be two months ago, in the second half of June. Even more than for the perspective of loans we should look at what is happening at our internal market. Judging by the latest available statistics, sales of currency at markets when considering enterprises and citizens together exceed purchases. In the last month an alarming tendency started to show itself: the population starts changing deposits in rubles into currency ones, but for now it doesn’t put any serious pressure on our ruble.

We do need loans, but there is no reason to say that we won’t get them. In late August a mission of the Eurasian Stabilisation and Development Fund is coming to Minsk – they have an agenda to discuss; for now there were no categorical statements that we won’t get a loan from ESDF.

Actually, we might as well get a loan from the International Monetary Fund, but it depends on whether the Belarusian authorities will dare to introduce structural reforms.

- Can the government be made to introduce these reforms without “daring/not daring”?

- It can. If the situation is absolutely hopeless, the country’s management will agree to anything. But we won’t see such hopeless situation for another 6 months. I.e. the resources that we have will allow us introduce repayments for previous loans until the end of the year without attracting new external loans. The problems will start in the next year.

- What is awaiting the rate of euro against dollar? European currency is quite popular in our country; a year ago ratio of euro and dollar was absolutely different; but we won’t see these indicators in the near future, will we?

- After sharp decline of euro – for almost half a year now – is in the horizontal corridor: it isn’t growing, it isn’t falling, but fluctuates within the frames of $1.08-1.12 for one euro. If we consider euro’s prospects, sharp growth of the European currency prospects is basically excluded. In the near future euro will continue its fluctuation in this narrow corridor. Now Europe is awaiting the US to increase the interest rate. If it happens, euro might fall to parity and lower than the dollar.