Economists skeptical about government's ruble exchange rate target for 2013

Belarusian economists expressed doubt in an interview with BelaPAN on Friday that the authorities would be able to keep the Belarusian rubel from dropping below 8,950 against the US dollar in 2013.

The rubel fell from 8,570 to 8,630 against the dollar as a result of Friday's trading session at the Belarusian Currency and Stock Exchange.

"In my opinion, the rubel exchange rate target for this year is unrealistic," said Stanislaw Bahdankevich, who served as head of the National Bank of Belarus between 1991 and 1995. "I think that the exchange rate will change gradually, and that one dollar will buy more than 10,000 rubels by the end of the year."

It is difficult to predict when the rubel will sink below 8,950 against the dollar, as the authorities still have gold and foreign exchange reserves and are able to obtain loans and sell state assets, he said.

According to Dr. Bahdankevich, there are currently no grounds for panic and fears that the rubel would plunge to 14,000 in spring. "There will be no abrupt one-time devaluation of the national currency," he said. "The depreciation of the rubel will be slow and gradual."

Heorhiy Hryts, deputy chairman of the Belarusian Scientific and Industrial Association, echoed Dr. Bahdankevich's remarks.

The government is unlikely to meet the exchange rate target for this year, Mr. Hryts said. The main reason is that Belarus' deficit in foreign trade in goods and services will probably continue to increase and reach $1 billion or $2 billion this year, he said.

If the government does not use its gold and foreign exchange reserves to prop up the rubel, it will fall below 10,000 against the US dollar in the first quarter, Mr. Hryts predicted. However, even by digging deep into its pockets, the authorities will not be able to stave off the drop for more than six months, he said.

The Belarusian rubel lost 17 percent of its value against the US dollar as a result of a currency devaluation in January 2009. The rubel was devalued by 36 percent against the dollar in May 2011 and by 34.3 percent in October 2011. Both Alyaksandr Lukashenka and Pyotr Prakapovich, then the head of the National Bank, and the National Bank press office had repeatedly dismissed reports of forthcoming devaluations as completely unfounded.

The 2012 Monetary Policy Guidelines projected the exchange rate of the Belarusian rubel to be 9,150 against the dollar at the end of the year.