National Bank aims to smooth fluctuations

Belarusian Rouble deposit rates should be more profitable than buying currency from currency exchange offices
By Anna Kotova

The Сhair of the National Bank’s Board, Nadezhda Yermakova, asserts that the National Bank is unafraid of salary increases leading to a run on currency exchange offices (which would affect the rate of the national currency). She explains, “Belarusian Rouble deposits need to offer a more profitable rate of return than buying currency from currency exchange offices.”

She continues, “Recently, the National Bank adopted a resolution to raise the compulsory reserve of foreign exchange reserves — to eliminate excess liquidity from banks. This will make currency resources more expensive for banks; accordingly, interest rates on foreign currency deposits are being reduced, while loans in foreign currencies are being made more affordable. Meanwhile, deposits in Belarusian Roubles are being made more attractive by raising rates. Liquidity is being reduced by encouraging Belarusian Rouble deposits, reducing the volume of money in general circulation.”

Speaking of whether the National Bank plans to intervene in the foreign exchange market, to influence the exchange rate of the Belarusian Rouble, Ms. Yermakova notes, “We’re working with a flexible, floating exchange rate, so the National Bank can smooth it just a little. Plans are not appropriate here, as we cannot raise or drop as we like.” Explaining the National Bank’s purchase or sale of foreign currency, Ms. Yermakova tells us, “We have only a few large companies in our country while Russia has many. Its foreign exchange earnings are sold on the currency exchange constantly, in large amounts. When there are fewer sellers, they tend to sell today and buy tomorrow, which can affect our national currency rate on a daily basis. The National Bank simply steps in to smooth such fluctuations.”
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