Foreign currency in ample supply
Since the beginning of this year, refinancing rates have fallen by 7 percent
National Bank aims at reduction
The fall in the refinancing rate, from 20 to 18 percent, has pleased potential borrowers, who are eager to enjoy cheaper loans. Financial analyst Vadim Iosub has no doubt that this will stimulate the population to apply for loans. He tells us, “See what’s happening: the sum of Rouble deposits in these last months hasn’t changed. If we ignore accrued interest, it’s actually fallen. Now, rates will be even lower and less attractive outwardly.”
The National Bank has well-founded logic in taking such a step: savings rates remain higher than inflation so depositors receive income. However, according to experts, people fear high inflation, due to past experience. It’s difficult to change this, regardless of well-founded measures taken by the National Bank. Therefore, news about a change in the refinancing rate presents depositors with the dilemma of whether to keep money in Roubles or whether to transfer into foreign currency, or simply to buy currency and keep it at home. Mr. Iosub comments, “Such a step is extremely unprofitable, since you lose any accrued interest.”
Foreign currency deposits comprise over 80 percent of all savings held in Belarus, which is more than is ideal, since rates are influenced by the policy of the Federal Reserve System of the USA. The Anti-crisis Fund of the EAEU and the IMF also notes the fall in the refinancing rate. On the one hand, we’re seeing currency market stabilisation, as international foreign currency organisations recognise. However, in their opinion, this stability could be more secure.
From September 1st, obligatory sale of currency received from exports is being dropped from 30 to 20 percent by the National Bank. Of course, this won’t affect the general public. Mr. Iosub underlines that demand for Dollars and Euros once outstripped supply, with exporters as the original guarantors of a certain volume of foreign currency being placed with the bank. However, he now notes, “Since February, the general public, and enterprises, have sold more currency than they’ve purchased, so there’s no deficiency of Dollars and Euros. Enterprises’ currency sales have reached 40 percent of their foreign currency holding, so the National Bank’s decision to lower the obligatory percentage won’t bring negative consequences for the currency market.”
By Galina Konovalova