Foreign exchange market situation is unstable
On February 8th, the National Bank published January 2013 currency market data.
Foreign exchange market situation in Belarus is unfavourable for the National Bank. All economic sectors returned to a net demand for foreign currency. New potash supply contracts will mitigate the foreign exchange market situation, but the success of the first half of 2012 will not be repeated.
Since June 2012 the population became a net buyer of foreign exchange. The reason being is wages growth: nominal wages have increased by 65% compared with December 2011 and the official inflation rate 21.78%. In December 2012 in the wake of the increased devaluation expectations, population’s net demand for cash currency rose to USD 181.2 million
On January 1st, 2013 currency exchange rates have not changed significantly, thereby reducing the population’s demand for foreign currency. Partially, the reduced foreign currency demand can be explained by the increased utilities costs and increased prices for some goods (tobacco, alcohol), resulting in higher spending in local currency. In addition, high rates in the deposit market attract additional financial resources of the population, reducing pressure on the currency market. In 2012 the banking system was able to attract additional BYR 5.8 trillion in the form of term deposits.
Non-resident legal persons are traditionally foreign currency net buyers. Only in February 2012 they were net sellers of currencies due to the possibility of gaining rapid profit by selling foreign exchange and opening short-term BYR deposits in Belarusian banks at favourable rates. Compared with January 2012, the situation in January 2013 is very different: there are no fast profits from solvents sales and foreign debt payments are high. Given the circumstances, non-residents prefer not to risk with their currency resources.
Resident legal persons have reduced foreign currency supply. January is traditionally the weakest in foreign trade. Until January 9th, Russia is on holidays. Russia accounts for over 35% of Belarusian exports. The reduced number of working days reduces the turnover and currency proceeds. Potash shipments (one of the main Belarusian exports) started only after the contracts with China and India were signed on January 15th and February 6th respectively. Oil supplies to Belarus remain the same, but refiners find the domestic market more profitable than export sales which results in reduced foreign currency proceeds.
Thus, the foreign exchange market situation in Belarus is unfavourable for the National Bank. Foreign exchange net purchase by enterprises and legal persons was USD 327.4 million and only the fourth tranche from the EurAsEC Anti-Crisis Fund helped to keep gold reserves above USD 8 billion. There are no grounds to expect an improvement in the foreign exchange market. Potash fertilizers’ sales will only improve the situation in terms of reducing the foreign exchange net purchases, but will be unable to compensate for the reduced revenues from petroleum products (solvents, lubricants) and biodiesel.
The Belarusian authorities have launched a discussion on the moratorium or abolition of the death penalty under the pressure of Belarusian human rights activists and international community. Apparently, the authorities are interested in monitoring public sentiments and response to the possible abolition of the capital punishment. The introduction of a moratorium on the death penalty would depend on the dynamics in Belarusian-European relations, efforts of the civil society organisations and Western capitals.
In Grodno last week, the possibility of abolishing the death penalty in Belarus or introducing a moratorium was discussed.
The Belarusian authorities are likely to continue to support the death penalty in Belarus. During his rule, President Lukashenka pardoned only one person, and courts sentenced to death more than 400 people since the early 1990s. Over the past year, Belarusian courts sentenced to death several persons and one person was executed.
There are no recent independent polls about people’s attitude about the death penalty in Belarus. Apparently, this issue is not a priority for the population. In many ways, public opinion about the abolition of the death penalty would depend on the tone of the state-owned media reports.
That said, the Belarusian Orthodox Church and the Roman-Catholic Church stand for the abolition of the capital punishment, however their efforts in this regard only limit to public statements about their stance. Simultaneously, the authorities could have influenced public opinion about the death penalty through a focused media campaign in the state media. As they did, for example, with the nuclear power plant construction in Astravets. Initially unpopular project of the NPP construction was broadly promoted in the state media, and eventually, according to independent pollsters, was accepted by most population.