BELARUS NEWS AND ANALYSIS

DATE:

15/08/2007

Belarus to dump Russian rouble in favour of US dollar

Minsk - Belarus will unhook its currency from the Russian rouble to tie it to the US dollar, the Interfax news agency reported on Wednesday. The former Soviet republic will cease using the Russian currency as the index currency for its own Belarusian rouble as of 2008, the report said, citing a planning document from the Belarusian National Bank (BNB).

Indexing the Belarusian rouble to the US dollar will help stabilise the Belarusian currency, and help Belarus increase its international trade, the BNB planning paper predicted.

The BNB will use monetary tactics to maintain the official exchange rate of the dollar to the rouble within a 5 per cent range of the market rate, according to the report. The BNB currently enforces the same bracket, based on the price of the Russian rouble.

The BNB at the same time will cease maintaining meaningful reserves of Russian roubles - a calculated snub at the Kremlin, which for years has pushed for use of the Russian rouble as a common currency for trade between former Soviet republics.

The Belarusian move if put into effect could improve the presently poor reputation of the Belarusian currency, referred to derisively by most Belarusians as "zaichiki", a insulting term meaning "little rabbits" or "public transportation cheats."

The Belarusian rouble is almost impossible to sell for a foreign currency anywhere except inside the country. For most of the 1990s the Belarusian rouble was printed in quantity without any monetary planning at all, sparking hyper-inflation.

The Belarusian decision to reject the Russian rouble is more evidence of deteriorating relations between the Kremlin and Minsk, who have had a falling out over energy prices since December.

Aleksander Lukashenko, Belarus' authoritarian leader, in the early years of his rule promised voters that his government sought eventual reunion with Russia.

Lukashenko in the wake of the energy crisis, leaving Belarus with the price of energy imported from Russia tripled overnight, has turned away from the policy, saying Belarus will live on its own without Russian assistance.

Source:

http://www.earthtimes.org/articles/show/93872.html