Friday, May 27, 2011

Belarus devalues their Rouble by a third against the USD

Belarus has cut the official value of its currency against the dollar by 36% according to BBC news.

The rouble is not freely convertible, with currency transactions controlled by the country's central bank. The dollar now buys 4,930 roubles at the official rate, up from 3,155 - but still well below the freely-traded interbank rate of about 7,000 roubles.The country faces a severe financial crisis, thanks to a large trade deficit and rapidly falling hard currency reserves.

Positive step
Many shops have been emptied of goods, as importers lack hard currency to purchase foreign goods. Exporters are required to repatriate 30% of their foreign currency earnings at the official exchange rate. "What they've done today is a positive step," says economist Alex Pivovarsky of the European Bank for Reconstruction and Development.

He explains that Belarus has lost international competitiveness over recent years, not least because its government raised wages significantly last year in the run-up to elections.

See the rest of the story in BBC here.

Geir Solem
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