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Exchange rate restrictions lifted in interbank market

The National Bank of Belarus (NBB) has abolished a 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, BelaPAN said.

While talking to reporters in Minsk on April 19, NBB Deputy Chairman Mikalay Luzhin said that the decision had been made for the purpose of restoring the country’s exchange market to normal operation and raising the transparency of how currency exchange rates are set.

In addition, he said, the step is aimed at “overcoming market participants’ current uncertainty regarding the further development of the situation in the domestic market, as well as at a transition to a single exchange rate in various segments of the exchange market.”

Mr. Luzhin said that after an exchange rate reflecting the balance of supply and demand was set in the interbank market, the NBB would take further steps to “stabilize” the situation in the exchange market and secure the Belarusian rubel’s single exchange rate in all segments of the market.

He confirmed plans for introducing “alternative” trading sessions at the Belarusian Currency and Stock Exchange to determine the rubel’s market exchange rate, a practice that was used by the NBB in the 1990s.

According to the plans, the market exchange rate of the rubel would be determined by alternative BSCE trading sessions on the basis of demand and supply, whereas the current system for establishing the official rate would be preserved, which means that the official rate would result from the primary trading session, where exporters are required to sell 30 percent of their foreign currency proceeds. Purchases at the primary trading session would continue to be limited to the purposes of financing critical imports, such natural gas and medicines, and repaying foreign loans.