National Bank explained why Belarusan ruble is falling

Ruble that is setting up records of fall almost each day became a hero of the official comment the National Bank made “due to active discussion of the current situation on foreign exchange market".

The National Bank notes that at the beginning of 2015 Belarus' central bank changed its approach to the exchange rate policy by limiting its participation in exchange trading in favor of relying on a flexible mechanism in setting the exchange rate of the Belarusian ruble. In essence the exchange rate of the Belarusian ruble against the U.S. dollar and other currencies has been driven by supply and demand on the market.

Speaking during the press conference held on 4 August for representatives of Belarusian and foreign mass media, Chairman of the Board of the National Bank of the Republic of Belarus (NBRB) Pavel Kallaur noted that there were no domestic factors considerably affecting the exchange rate of the Belarusian ruble. The NBRB head underlined that in conditions of the market-driven exchange rate mechanism future changes of the Belarusian ruble's exchange rate would depend a lot on external factors, primarily prices for oil and changes of the exchange rate of the national currencies in the countries, which are Belarus' main trade partners.

“Since then serious changes have happened on international financial markets. They greatly increased the volatility of a number of key economic indicators. The Belarusian currency market has been affected by the drastic decrease in global prices for oil, a considerable decrease in the strength of the Russian ruble, the Chinese yuan, and the Kazakh tenge. The exchange rate of the Belarusian ruble against some currencies is now more volatile”, - the National Bank emphasizes.

According to the National Bank, the flexible exchange rate policy pursued by the National Bank allows the exchange rate to act as an absorbent of unfavorable external factors, reducing the degree of foreign economic misbalance: “In conditions of guided floating the current dynamics of the exchange rate of the Belarusian ruble, which represents a response to external economic factors, allows maintaining the competitive ability of the national economy as well as business activity. It also acts as a factor of macroeconomic stability”.

The National Bank claims that its actions are aimed at reducing excessive market fluctuations without blocking the effect of fundamental factors. The rigorous monetary and fiscal policies are meant to support the exchange rate and curb the inflation.

In the near future efforts of the National Bank of the Republic of Belarus will be focused on securing price stability in order to preserve the purchasing capacity of the Belarusian ruble. The stabilization of inflation processes will make the economy stable in the medium term and will contribute to the enabling of conditions conducive to long-term economic growth.