BELARUS NEWS AND ANALYSIS

DATE:

16/08/2007

Belarus Plans To Drop Currency Peg To Russian Ruble In 2008

The Belarusian National Bank has made public its monetary policy guidelines for 2008, in which it sets out plans to peg the exchange rate of the Belarusian ruble to the U.S. dollar instead of the Russian ruble as it does now, Belapan reported on August 15. Belarus's central bank said it believes that maintaining the ruble's steady exchange rate against the U.S. dollar is the most efficient monetary policy tool for curbing domestic inflation, prompted by the considerable share of U.S. cash in the domestic exchange market and households' foreign-currency savings, as well as the high share of the U.S. dollar in foreign-trade transactions. Andrei Nechaev, a former Russian economy minister, told the Ekho Moskvy radio station on August 15 that Belarus and Russia "can kiss goodbye" plans for the introduction of a single currency if Minsk drops the Belarusian ruble's peg to the Russian currency. Meanwhile, former Belarusian National Bank head Stanislau Bahdankevich told RFE/RL's Belarus Service that the U.S. dollar remains the de facto main indicator for the national bank in shaping its current exchange policy. Pegging the Belarusian ruble to the U.S. dollar "seems to be a right step if seen from the position of Belarus's sovereignty and independence," Bahdankevich noted. "But it is a fallacious step from an economic point of view. It is necessary [for Belarus] to orient itself toward its main economic partners -- Russia, the European Union, and the United States." JM

Source:

http://www.rferl.org/newsline/2007/08/3-cee/cee-160807.asp

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