As Euromoney went to press there was widespread speculation that Belarus would be forced to devalue the rouble for the second time in as many years, amid a spiralling current account deficit and dwindling FX reserves.
Russian financial assistance is likely to play a key role in Belarus avoiding devaluation and a possible sovereign debt default. However, any funding from Moscow is likely to come with strings attached and might lead to prize Belarusian assets falling into Russian hands. Belarus is seeking a $1 billion loan from Moscow and $1.7 billion from a Russia-led regional bailout fund.
In recent weeks Belarusian citizens have been besieging banks and foreign exchange bureaux seeking to swap their Belarusian roubles for dollars and euros. The speculative demand for foreign currency has already caused the unofficial exchange rate to fall by around 20%.
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| fall in Belarus’s foreign currency reserves in six months |
That fall mirrors the 20% official devaluation that Belarus carried out in January 2009 as one of the conditions for receiving a $2.5 billion loan from the IMF to help prop up its economy after exports plummeted in the wake of the global economic downturn.