Where the dollar is heading? - chronicles of the drop

The second week on the Belarusian Currency and Stock Exchange the dollar rate persistently tend to a bottom. Such a rapid depreciation of the U.S. currency was not observed, since the single rate in October 2011 has been established.

At the end of trading session at the BCSE on February 28 "the green" fell in price by another Br60 - from Br8110 to B8070. And in October the Belarusian "bunny" has strengthened against the dollar by 610 rubles, or approximately by 7%.

As acknowledged by the head of the National Bank of Belarus Nadezhda Ermakova, the dollar would "fell" even lower if the National Bank did not buy the extra currency which is thrown at the stock exchange trades.

Experts don't have an unambiguous conclusion, what has caused the strengthening of the Belarusian currency, but officials already report: the economic and financial crisis is over.

"It is true that we have experienced economic and financial crisis. It is my assessment that we have already passed it", First Vice Premier Vladimir Semashko said during the February 24 meeting of the National Council for Labour and Social Affairs in Minsk.

Speaking about the causes of crisis, the official noted, there were external and internal causes. Among the external causes he called rising gas prices and declining conditions of oil supplies. "Equilibration" with oil prices has started, influenced by other economic and political, as I call them, factors", "Interfax-Zapad" quotes First Vice Premier.

The main internal cause of the crisis Semashko named the disproportionate increase in wages. "This is the issue of advancing the wage growth over the productivity growth. Do you remember how we raised wages at the end of 2010. There was a bias and it was a catalyst for the crisis", First Vice-Premier emphasized.

According to him, "the crisis could be passed softer, inflation and devaluation could be double-digit, if we had acted more decisively".

According to the analyst of the Belarusian Economic Research and Education Center (BEROC) Ekaterina Bornukova, there is no macroeconomic basis for strengthening the Belarusian ruble.

"For me, this decline remains a mystery: foreign trade balance is still negative, there is no structural changes in the economy, therefore, there is no objective reasons of strengthening the ruble. We can assume, that so far the energy companies hasn't entered the foreign exchange market, they need currency to pay for imported gas, oil and petroleum products. Also a little support to Belarusian ruble give those who are trying to earn a higher interest rate on deposits in domestic currency by transferring foreign currency deposits in ruble ones", Bornukova said in an interview with onliner.by.

But the chairman of the Finance Directors Club of Belarus Andrei Karpunin believes that the depreciation of the dollar has a short-term and local character.

"It seems, there is some trick of the state. In the near future payments on foreign obligations (delivery of energy) must happen. Therefore, the state decided to buy for this purpose the very cheap currency. State enterprises-exporters sold foreign currency to pay taxes (meaning the period of payment of land tax), to advance payments, etc.", the analyst explained.

"In the near future, the correction should take place, that is, the dollar will go up again. Rise in prices within the country (3.3% YTD) reduces the positive effect of devaluation and requires a further weakening of the Belarusian ruble. Otherwise, there can be problems with the balance of foreign trade, it may again become a deeply negative", Karpunin predicts.