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NBRB encourages commercial banks to analyze consequences of unified exchange rate

MINSK, 27 October (BelTA) – The National Bank of the Republic of Belarus (NBRB) suggests that commercial banks should analyze consequences of the unified exchange rate of the Belarusian ruble, representatives of the NBRB Information Office told BelTA after an extended participation session of the NBRB board.

NBRB Chairwoman of the Board Nadezhda Yermakova held the extended participation session on 26 October to discuss the fulfillment of the major guidelines of Belarus’ monetary management policy in January-September 2011 and what the national banking system has to do in Q4 2011.

Among other things the banks are encouraged to analyze the observance of safe operation standards, dynamics of problem assets. Belarusian banks are encouraged to help exporters reduce accounts receivable and return export earnings, to continue taking measures to prevent overstressing natural persons as they work to pay out loan debts. Lending practices of Belarusian banks are supposed to take into account the advisability of giving top priority support to the manufacturing of products able to earn foreign currency and substitute imports.

At present the NBRB keeps the Belarusian ruble stable using rigid monetary management and interest rate policies in a bid to make the transition to a manageable float mode. The NBRB does very little to influence the exchange rate, using currency interventions to smooth out only drastic fluctuations of the exchange rate.

At the session it was said that this year’s monetary management had to deal with rather complicated economic conditions. With the foreign trade deficit on the rise and external funding limited, the demand for foreign currency overshot the supply, forcing the NBRB to tap into gold and foreign exchange reserves. In March the NBRB stopped exchange market interventions in order to preserve enough gold and forex reserves to honor the country’s external liabilities. The step led to multiple exchange rates, spurring inflation processes, triggering the outflow of fixed-term ruble and foreign currency deposits of individuals from banks.

The country’s main bank has taken measures to reverse the situation. Emission-based lending for government programs was stopped on 1 June. Interest rates were raised, international reserves were increased, and some other measures were taken.

According to the source, the measures taken by the government and the National Bank have stopped the negative tendencies that were registered early this year and have corrected foreign trade disproportions. Belarus’ export has reached record figures, with import growth slowing down. There are positive tendencies in forex earnings, too, said the source.

In mid-June the inflow of fixed-term ruble deposits of individuals was stabilized and secured. Between 15 June and 15 October 2011 their volume went up 22.5% or Br1.5 trillion.