Will the dollar continue to rise in value?
The dollar has been rising at a record pace this week. On February 13, it rose beyond the psychological threshold of 2.2 rubles.
What does it mean for the Belarusian economy? Is there any need to run to the exchange offices? Should we be expecting depreciation? The Charter 97.org website has talked to Doctor of Economic Sciences Barys Zhaliba.
- In fact, we have witnessed further depreciation of the Belarusian ruble. This is connected with the reduction of exports. It was reducing last year compared to the same month of 2018. Statistics shows a large reduction in exports in January and in the current month.
This is because our refineries stopped supplying oil from Russia. And oil refining is the hen that lays golden eggs in terms of currency supply. Now our refineries operate at one third of their capacity, at maximum by half. When they were operating at full capacity, they gave us up to one third of all the currency.
The second source of currency we have is potash fertilizers. We still do not have a supply contract with our main buyer, China. In the past it was always concluded before the new year. This is why there is also a deficit with regard to the second source of currency.
That's why there's such a situation with the ruble exchange rate. However, our National Bank is comforting that it's nothing serious, it's temporary, that it's local depreciation, and that the Belarusian ruble can win back its position, reach the rate we're used to, say, 2.10 or 2.12, again. But so far we have what we have.
- What processes in the economy can this situation talk about?
- The ruble is depreciating, the whole economy is slowing down. The same refineries and Belaruskali make a significant contribution to GDP. The statistics will soon publish the data for January. It may well show negative GDP, i.e. a decrease in GDP compared to January last year. So far there has been no progress in concluding contracts with Russian oil companies, which provide raw materials. The meeting in Sochi has not yielded any results. Yes, last year's gas prices are still there. And with regards to oil, and this is a more important issue for the currency, there will still be negotiations, and nobody knows when and how they will end. Therefore, the situation at the beginning of this year is very bad for the economy.
- How do you assess the prospects of the Belarusian ruble this year, taking into account new challenges for the economy?
- The prospect is already being felt. If we do not expand export in our traditional commodity groups, which are oil products, potash fertilizers and dairy products (Rosselkhoznadzor does not change its policy yet and restricts supplies to our dairy enterprises) in the remaining months, then our prospects are not great.
Let's see, the National Bank should make some efforts so that this depreciation does not become a landslide disaster. Let's hope so.
- Many people note the high inflationary expectations of the population. Is it necessary to convert existing savings into another currency?
- Yes, this depreciation has already created an element of panic, especially among individuals. Given the higher ruble interest on bank deposits, the center of gravity of savings started shifting in their favor. If before we did not trust the ruble and three quarters of people used to keep money in foreign currency deposits, in recent years it was already better, as it was only two thirds. Now they are doubtful about the ruble again. Banks will show us whether there will be moves from ruble deposits in favor of foreign currency, despite the fact that interest remains very low there. This is the first thing.
The second one is that if the depreciation continues, then, as the macroeconomic theory says, we should expect inflation to follow it. That's why the inflation sentiment among the population is getting stronger. The task of the government and the National Bank is to restrain the depreciation as a local factor and ensure that the ruble regains its previous exchange rate positions.