Economist: Belarusians Have to Sell Currency Because of Poverty

The major part of income is spent on food and payments for housing and communal services.

According to the data of the National Bank for September 2019, people remain net sellers of hard currency. Belarusians have been selling more hard currency than they buy for 3.5 years in a row with rare exceptions, kp.by informs.

At that, net sales of hard currency (that is, the prevalence of sales over purchases) are steadily falling. Thus, over the first six months of 2019, the net sales of hard currency by the population dropped by almost 2.5 times compared to the same period in 2018! In September 2019, the trend continued. Belarusians sold $699.5 million to banks, which is 2.1% less than in August. People sold out cash currency unwillingly as well - 7.3% less often. Albeit insignificantly, but purchase also dropped by 0.5% over the month - up to $551.4 million.

In total, the net sales of hard currency in the country amounted to $1.165 billion for 9 months.

- Why do people usually sell foreign currency than buy it? This means that people spend their currency savings.

- Roughly speaking, net sales of foreign currency have been caused by poverty, not wealth," Vadzim Iasub, senior analyst at Alpari, explains. - The main reason is the decline in real incomes, which has been ongoing since the beginning of 2015. It was followed by sudden devaluation and recession. Salaries have declined in real terms and foreign currency equivalent. One should realise that most of the country is not rich, and people spend their income on essentials: food and utilities. If your salary dropped by 20%, you will not be able to eat 20% less. You want to maintain your standard of living somehow so that the amount of food and the salary remained the same. Some people do not have savings. But most people spend their savings, commonly foreign ones. The currency is spent to live an ordinary life.

There are factors not related to income, but they also influence the size of currency sold by the population:

For example, more Belarusians go abroad to earn money, send foreign currency here and sell it to live here. But it is impossible to estimate how much cash was brought from other countries. Another factor is the gradual decrease in the share of foreign currency deposits, while the share of ruble ones is growing. Ruble deposits are now more profitable. Those, who had foreign currency deposits, partially convert them into ruble deposits and sell foreign currency for this purpose," the analyst says.