Leanid Zaika: If Lukashenka Flies to the Emirates, the Ruble Will Start to Revive

The Belarusian ruble is rushing into another abyss.

Is it possible to call another depreciation of the national currency devaluation? Why did it happen? To what extent will the dollar and Euro become heavier?

These and other questions are answered by myfin.by this was answered by Leanid Zaika, Ph.D. in Economics, head of the analytical center "Strategy."

The Belarusian ruble is rushing into another abyss-yesterday it broke the annual record set in March – the dollar has never cost so much. Even the letter of the National Bank, which called on banks to approach the formation of exchange rates with restraint, did not help – the figures that Belarusians see in exchange offices clearly indicate that the authorities have lost control.

This is devaluation

I could have said on December 28 that we would have a devaluation in 2020, and now it has happened. For several days in a row, the ruble exchange rate is seriously falling – not the dollar or Euro are getting more expensive, but the Belarusian ruble is getting cheaper. What we see now is the process of changing the real content of the Belarusian ruble, because of two important factors.

The root of evil is in the policy of the authorities

The first is the disparity in income policy, which has been growing since last year. Because labor productivity grew slowly, GDP generally fell, and wages rose-at once by 8%: Pavel Uladzimiravich Kallaur, probably, is afraid of the strict eyes of Aliaksandr Ryhoravich. And now he will be even more afraid because the one with the machine gun began to walk around.

And the monetary policy will be even worse: try not to follow some instruction of Lukashenka – the National Bank will be full of holes, like a target on the range.

There is no faith in symbols

Recently, another step was taken within the framework of this absolutely wild, absolutely stupid "party line": pensions were paid early and increased by 6%. And GDP is not growing and even falling. However, thanks to accountants' efforts from the government, only by one and a half percent.

The second factor is man-made-creating a situation of "raids on banks." The reason for this is not the wrong people, who create problems for themselves, but the fact that the authorities are now unable to carry out any sane policy – neither economic, nor electoral, nor law enforcement, so we will call it. Seeing this, people lost faith in the main symbols of the state – the flag, the emblem, and the ruble.

Dollar-3, Euro-3.5 rubles

How deep can we fall into this hole? Here we must remember Ostap Bender: "the financial abyss is the deepest of all abysses, you can fall into it all your life."

First, there will be an overlap – the Euro will reach 3.5, the dollar will overcome the mark of 3 rubles. And then there will be a rollback. This is also because the currency will start to flow into the country when the ruble collapses even more.

If Lukashenka leaves for a holiday in the Emirates, the ruble will start to revive. It is very profitable for currency speculators to escalate the situation, sell their currency, lure Aliaksandr Ryhoravich on vacation, and earn good money.

Not everyone is impoverished

Reducing our currency's purchasing power is beneficial only to three categories-exporters, currency prostitutes, and officials who take bribes. Everyone else will lose out.

Since there are few people in the country whose income is denominated in foreign currency, the authorities' stupid policy will lead to the fact that the majority of Belarusians will live worse.

And quite quickly - food and other goods that are mostly imported in stores will rise in price when a new batch is delivered. But we went through 2011 and 2014, right?

Your stash will run out quickly

Belarusians who buy currency in banks cannot convert all their money into" dollars-euros": only a small part of the population's ruble deposits are available today – many either believed the authorities or wanted to earn money and keep their savings on irrevocable deposits. After all, they were the most profitable in Europe.

But it seems that not only the population is now buying currency, but also businesses that have foreign currency loans or need to buy something abroad. They have more money available, but not much.

Lukashenko's Mistake

Six months after the beginning of the coronavirus epidemic in Belarus, it became clear what a mistake Lukashenka made by not introducing a quarantine and stopping production. Yes, GDP did not fall as much as in the US, where it fell by a third in six months, but when everything around is falling, who will buy our tractors, trucks, washing machines, and refrigerators?

As a result, the factories' money was deadened in warehouses that are filled with unnecessary equipment and other goods.

What is the result?

The devaluation will continue, but it is still unclear how. It may be sluggish, but it still threatens the image of the government. It is necessary to slow down the process of raiding banks and taking money out of them.

This is easy to do – first, you need to increase interest rates on foreign currency deposits. It is stupid to take money abroad at 6-7%, and give your people 2-2.5%. This will return part of the deposits, as well as the currency that Belarusians purchased this week and put "under the mattress."

Second, restrictions on currency transactions to reduce demand. You can enter spending limits and take other steps. But the limit of the devaluation of the Belarusian ruble will be set not by these measures, but by currency speculators.