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Rouble crisis sparks run on Belarus currency

Dec 19 2014 14:36

Minsk - Belarussians on Friday reacted with panic to the Russianrouble's plunge, rushing to buy foreign notes as they fear a devaluation of their own currency.

The run on the Belarussian rouble forced the central bank to announce a "temporary" tax of 30% on all purchases of foreign currency.

The bank also required all exporters to convert half of their foreign revenues into local currency, while interest rates were raised to encourage Belarussians to keep their money in their bank accounts, according to a statement published on Friday on the central bank's website.

The Belarussian rouble is not officially pegged to the Russian currency, but the former Soviet country's economy is heavily dependent on its giant neighbour.

Belarussians have already experienced a dramatic economic crisis in 2011 with a series of devaluations of the currency and galloping inflation.

On Friday, several foreign exchange offices were shut and some people had to queue for two hours to withdraw cash at banks.

The market rate for Belarussian roubles on Friday morning was 8% down on the day before. The Belarussian stock exchange was closed on Friday.

The current panic behaviour "is explained by the loss in value of the Russian rouble and rumours of an imminent devaluation of the Belarussian ruble," said economist Vladimir Tarasov.

"At the moment, the crisis is only technical: the banks were not ready to respond to such a demand for foreign currency. But in the days to come, it could become a major financial crisis if Russia does not give it several billion dollars in aid," he added.

The International Monetary Fund lent Minsk $3.5bn in 2009 but refused to give it further support since 2011 as Belarus refused to implement the liberal reforms and impose the budgetary cuts it demanded.

belarus  |  markets  |  currencies  |  rouble
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