National Bank managed to overcome population’s devaluation expectations
The National Bank’s arrangements to encourage national currency savings by private and legal persons have proved to be effective. However, substantial foreign debt payments and a potential reduction in the international reserves in 2013, against the background of Belarus’ troubled international trade, could result in a rapid conversion of private and business BYR deposits into foreign currency.
On December 14th, money supply data was published.
In August through October, international trade deficit in goods, according to the National Statistics Committee, was USD 1 130.8 million. Legal persons (residents and non-residents) were net buyers of foreign currency. Private individuals, due to wage increases, have become active foreign-currency buyers, increasing foreign currency deposits in the banking system. Devaluation expectations increased and affected the transition of ruble savings into foreign-currency savings.
Fearing the building up banking system risks, the National Bank has undertaken preventive actions to curb the growth of economy’s foreign currency debt, and has restricted support to the banking system’s liquidity. As a result, interest rates on foreign currency deposits decreased and increased on ruble deposits simultaneously, both for the population and businesses. Against the background of support to the national currency, a substantial gap in yield has developed between national and foreign currency deposits.
November financial data showed that the population and legal entities appreciated the short-term investment opportunities in national currency for their high and relatively guaranteed proceeds. In foreign currency, the positive effects will be achieved after the reverse conversion of BYR deposits. Term deposits in the national currency increased by BYR 2.9 trillion in November, which is an absolute record in several years. However, the current state of affairs should not be regarded as having long-term effects due to the deteriorating financial situation of the SOEs and the growth of receivables and payables.
Thus, the success of the National Bank’s arrangements in overcoming the devaluation expectations in the short term is noteworthy. However, substantial foreign debt payments and a potential reduction in the international reserves in 2013, against the background of Belarus’ troubled international trade, could result in a rapid conversion of private and business BYR deposits into foreign currency.
The Belarusian authorities regard the Catholic conference as yet another international event to promote Minsk as a global negotiating platform. Minsk’s proposal to organise a meeting between the Roman-Catholic Church and the Russian Orthodox Church is rather an image-making undertaking than a serious intention. However, the authorities could somewhat extend the opportunities for the Roman-Catholic Church in Belarus due to developing contacts with the Catholic world.
Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.
Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.
In addition, for domestic audiences, the authorities make up for the lack of tangible economic growth with demonstrations of growth in Minsk’s authority at international level through providing a platform for religious, sportive and other dialogues.