BELARUS NEWS AND ANALYSIS
DATE:
17/03/2011
Belarus could face serious devaluation - RBI unit
MINSK, March 17 (Reuters) - The Belarussian rouble could seriously weaken this year, the head of the country's largest private bank said on Thursday in a rare comment by a business leader casting public doubt on official policy.
The former Soviet republic is running out of forex reserves due to a high current account deficit driven by wage rises and loans handed out by President Alexander Lukashenko's government before last year's presidential elections. [ID:nLDE72E0IA]
The central bank has said the currency would not weaken or strengthen by more than 8 percent against a basket of currencies that includes the dollar, the euro and the Russian rouble.
But the population is unconvinced, queueing up to buy foreign currency in recent days, and the latest comments suggest businesses are also preparing for a sharper devaluation.
The Belarussian rouble has weakened by 4.5 percent against the basket so far this year while central bank reserves shrank by 20 percent in January-February to $4 billion, prompting a sovereign rating downgrade by S&P [ID:nWLA5345].
Sergei Kostyuchenko, CEO of Priorbank, a Raiffeisen Bank International RIBH.VI subsidiary, told a shareholder meeting on Thursday the bank had three macroeconomic scenarios for this year on which it was basing its business plans.
"The pessimistic scenario includes a serious devaluation of the rouble," he said without elaborating.
The International Monetary Fund has urged Belarus to take quick steps to cut its foreign account deficit, including some devaluation, but Minsk, which has no running IMF programme, has so far ignored the suggestion.
Instead, Belarus has tightened FX controls and sought fresh loans from Russia and other ex-Soviet nations. [ID:nLDE72E2RN]
Investors are getting worried, with yields on the Belarus Eurobond issued last summer jumping a full percentage point in the past two weeks to nearly 10 percent. BY052939470= (Reporting by Alexander Gelogayev; Writing by Olzhas Auyezov; Editing by Ruth Pitchford)
Source:
http://www.reuters.com/article/2011/03/17/belarus-forex-raiffeisen-idUSLDE72G1AR20110317
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