Belarus Likely to Devalue as Reserves Dwindle, Danske Bank Says

By Jason Webb

Belarus is likely to devalue its ruble as it runs out of foreign reserves because of an “intolerable” current-account deficit, according to Danske Bank A/S.

The former Soviet republic’s attempts to seek a loan from Russia will not succeed in maintaining the value of the Belarusian ruble, Sanna Kurronen, a Helsinki-based analyst at the bank, wrote in a research note today.

“The situation seems to be escalating rapidly,” Kurronen wrote. “We see no other reasonable alternative but for a devaluation against the currency basket.”

The country’s foreign reserves were at $2.9 billion in December, down 33 percent from a year earlier, while its current-account deficit was 15.6 percent of GDP last year, according to data compiled by Bloomberg. In comparison, Greece’s current-account deficit reached 15.3 percent of GDP in the third quarter of 2008, and began 2010 at 12.2 percent before the country had to turn to the European Union for a rescue loan.

Belarus asked Russia and its other former Soviet partners for loans totaling $3 billion, Russian Finance Minister Alexei Kudrin said on March 15.

No one answered the telephone at Belarus’s central bank today. The Natsionalnyi Bank Respubliki Belarus said on March 15 that it has no plans for a “sharp” currency devaluation.

The Belarusian ruble will be allowed to fluctuate within 8 percent of 1,057.04 rubles, the value of its target basket at the start of the year, the bank said March 15. The basket is divided equally into dollars, euros and Russian rubles.

The central bank devalued its currency by about a fifth in January 2009. The Belarusian ruble was quoted at 3,020 to the dollar today, unchanged from March 18.

Standard & Poor’s cut its assessment on Belarusian debt one step to B, five steps below investment grade, from B+, on March 14.

To contact the reporters on this story: Jason Webb in London at

To contact the editors responsible for this story: Balazs Penz at


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