Higher interest rates and new foreign loan may stop Belarusians from withdrawing deposits from banks

According to the National Bank, in January 2016, the population withdrew USD 128.1 million from the banks, leaving USD 8.1 billion, and BYR 2.7 trillion, leaving BYR 37.5 trillion in the banks. Deposits outflow from the banks was due to the new interest rate policy of the National Bank and the weakening of the national currency. People have spent their rouble cash on foreign currency. The Belarusian rouble is likely to continue to depreciate, while the net demand for foreign currency from the population is likely to persist. The banking system liquidity is likely to deteriorate and banks may issue new bonds with yield higher than interest rates on deposits. In addition, banks may restrict access to foreign currency deposits of the population for three months. Current trends on the Belarusian currency and deposit market may be reversed, if the National Bank revises its interest rate policy and simultaneously receives a large foreign loan.