Arab Today, arab today belarus ruble sinks 34 in full free float
Last Updated : GMT 18:13:02
Arab Today, arab today
Arab Today, arab today

Belarus ruble sinks 34% in full free float

Arab Today, arab today

Arab Today, arab today Belarus ruble sinks 34% in full free float

Minsk - AFP

The Belarus ruble on Thursday shed a third of its value in a full market free float that set a single exchange rate in line with demands from the IMF and the crisis-hit country\'s main sponsor Russia. The 34.2 percent drop from the old official rate of 5,712 rubles against the dollar to 8,680 followed a five-week span when free trading was limited to a short special session while most firms sold under restricted conditions to the state. The new unified session is also meant to eliminate a black market that moved a large part of the economy underground and discredited state attempts to show that it was keeping price inflation in check. \"The free float ... is necessary. It will restore the balance between supply and demand for foreign currency ... and will over time lead to the current account rebalancing,\" said Nomura bank emerging market analyst Tatiana Orlova. \"In the medium term, it should help economic growth as it should restore competitiveness of exporting sectors and reduce demand for imported goods.\" Orlova also warned however that Belarus must now focus on stemming an inflation rate that continued to spiral this summer and touched 80 percent in year-on-year terms last month. She said the IMF is still unhappy with Belarus for recently raising state sector wages in a bid to deal with the political risks of the skyrocketing prices. \"I think that after the devaluation, the government will need to demonstrate its commitment to fiscal discipline and tight monetary policies in order to receive the IMF assistance,\" Orlova said. Belarus President Alexander Lukashenko predicted earlier this week that the ruble rate would soon stabilise and start climbing again. \"As soon as all this currency pours out onto the market -- the dollars and the euros that we now spend on buying gas (from Russia) and so on -- then the supply of dollars will be very high,\" Lukashenko said. National Bank of Belarus chief Nadezhda Yermakova echoed those comments after the first 60-minute session was over. \"We would like to see the ruble strengthen to 7,000-8,000 (against the dollar)\" she told reporters. A dire fiscal crisis linked to pricing disputes with Russia has forced the ex-Soviet republic of about 10 million people to devalue its currency by some 60 percent since May. The authoritarian president had bitterly resisted the unpopular measure and himself raised the possibility of getting as much as $7.5 billion from the IMF this summer. An IMF team concluded a fact-finding mission to Minsk this weekend by urging Minsk to tighten its fiscal policies. \"Before negotiations (on a loan) can begin, authorities must demonstrate a clear commitment to stability and reform and reflect this commitment in the actions,\" IMF country chief Chris Jarvis said before his departure. The fund team did not name a return date and the National Bank\'s Yermakova said \"political demands\" on Lukashenko from the global community were making the chances of foreign assistance smaller. \"There is a chance that there will be no IMF loan for Belarus because even if we implement all the conditions -- the political demands remain,\" Yermakova said on Thursday. Belarus is also hoping to receive $3.5 billion in the next three years from a group of nations led by Russia in exchange for a full-fledged privatisation drive.  

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