Foreign currency exchange: expansion of the currency corridor

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April 22, 2016 17:52

On 12 May the National Bank of Belarus expanded the corridor for the Belarusian ruble rate deviation against a basket of currencies (US Dollar, Euro, Russian ruble) from 8% to 12%.

Comment 

Expansion of the corridor was the right decision, it made the exchange rate policy more flexible, however, it was insufficient, given the balancing rate was far above the upper margin level set by the National Bank. 

Plurality of exchange rates distorts the economic picture and has negative impact on both, importers and exporters. Moreover, it affects insurance, leasing, construction and other companies, as their customer contracts are tied to the official exchange rate. Currency risks and uncertainty lead to higher prices and to degradation of variety of goods.

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