English

National Bank to ban currency exchange transactions in inter-bank market

Currency exchange transactions in the inter-bank market will in fact be completely stopped with the introduction of an additional trading session at the Belarusian Currency and Stock Exchange (BCSE) in mid-September, Mikalay Luzhin, first deputy head of the National Bank of Belarus (NBB), told reporters in Minsk on Monday, BelaPAN said.

This will be done so that all currency exchange transactions will be made at the BCSE at a uniform rate on the basis of demand and supply, he noted.

For the Belarusian rubel’s rate at the additional session not to be much below the official rate, the NBB will take additional measures to “suppress” the demand for foreign currency and increase the supply, Mr. Luzhin said.

He noted that the rubel’s rate at the additional session would be largely, but not completely, determined by the interaction of demand and supply, and that the NBB would only make occasional targeted interventions to “smooth out” the rate’s fluctuations.

“We try to reduce the rubel supply and thereby diminish the demand for foreign currency,” Mr. Luzhin said.

“All these are preparations for the direct achievement of a single rate,” he noted.

NBB head Nadzeya Yermakova predicted last week that the market exchange rate of the Belarusian rubel would not be below 10,000 per US dollar after the introduction of the additional session at the BCSE.

“Since the rubel’s rate in the black market is currently about 10,000 per dollar, I don’t think it [the rubel’s rate at the additional session] will go below this level,” Ms. Yermakova said.

According to her, the main goal is to bring the rate closer to the “official” exchange rate of the rubel, which stood at 5,152 on September 5, but this will not be done “mechanically.”

It is necessary to “strike the happy medium,” which would reflect the real value of the national currency, Ms. Yermakova said.

According to her, after an “equilibrium rate” sets in at the additional session, it will become a single rate in all segments of the exchange market and there will be no more need for the additional session.