English

IMF welcomes widening of rubel’s exchange rate band

The International Monetary Fund (IMF) has welcomed the expansion of the Belarusian rubel’s range of fluctuation against a three-currency basket from five to 10 percent.

The National Bank of Belarus pegged the rubel to a basket of foreign currencies, the US dollar, the euro and the Russian ruble, earlier this year, promising to ensure that the rubel’s fluctuations against the basket do not exceed five percent throughout the year. The rate was projected to fluctuate between 912 and 1,008 rubels against the basket. With the limits now widened by another five percent, the currency may fluctuate from 864 to 1,056 rubels against the basket.

“We support the decision of the National Bank of the Republic of Belarus to widen the exchange rate band from ±5 percent to ±10 percent. The widening of the band increases the flexibility of the exchange rate regime, which will make it easier for Belarus to absorb external shocks,” Chris Jarvis, head of the IMF mission to Belarus, said in a statement on June 22.

“The recent gradual depreciation of the exchange rate within the band will improve Belarus’s balance of payments. The decision by the NBRB last week to increase the interest rate on overnight lending to commercial banks was a positive step that will support economic and exchange rate stability,” the statement said.

In an interview with BelaPAN on Monday, opposition economist Yaraslaw Ramanchuk predicted that the National Bank would have to further expand the rubel’s range of fluctuation later this year.

“The rubel’s gradual devaluation is obvious,” Mr. Ramanchuk said, linking the National Bank’s move to a shortage of foreign cash in the country caused by a plunge in exports and a lack of foreign investments.

The economist predicted that the Belarusian currency would fall to 3,300 rubels against the dollar by September.