Belarusian Ruble Will Start To Give Up Against The Dollar

This will be affected by the decision of the Russian Central Bank.

On June 6, the Russian Central Bank lowered the key rate - the analog of the refinancing rate in Belarus - to 20% per annum. This is 100 basis points less than it was earlier. How this news may affect the Belarusian currency market - writes "Mirror".

Why did the Russian Central Bank lower the key rate?"

"Current inflationary pressures, including sustained ones, continue to ease. With domestic demand still outstripping the possibility of expanding the supply of goods and services, the Russian economy is gradually returning to the trajectory of balanced growth," the Russian Central Bank explained.

At the same time, further decisions on the key rate will be made depending on the speed and sustainability of the decline in inflation and inflation expectations. According to the forecast of the Bank of Russia, taking into account the ongoing monetary policy, the annual inflation rate will return to 4% in 2026 and will be on target thereafter.

Now the annual inflation rate in Russia exceeds the mark of 10%.

"Inflation risks have slightly decreased, but still prevail over disinflationary risks on the medium-term horizon, - specified in the Central Bank of Russia. - The main pro-inflationary risks are associated with the longer persistence of the deviation of the Russian economy upward from the trajectory of balanced growth and high inflationary expectations, as well as with the deterioration of foreign trade conditions. A further slowdown in global economic growth and oil prices in case of trade contradictions intensification may have pro-inflationary effects through the ruble exchange rate dynamics".

The regulator specifies that "disinflationary risks are associated with a more significant slowdown in credit growth and domestic demand under the influence of tight monetary conditions".

"Disinflationary impact may also have an improvement in external conditions in case of reduction of geopolitical tensions," - said the Russian Central Bank.

How can this situation affect Belarus?"

The situation in the Belarusian currency market largely depends on the situation in Russia, explained earlier BEROC expert Anastasia Luzgina. She predicted that the Russian Central Bank may reduce the key rate. "This is able to affect the Russian ruble - towards the reduction of its rate," explained the economist.

Anastasia Luzgina predicted that against the background of the key rate reduction by the Russian Central Bank, the Russian ruble will gradually weaken against the dollar, followed by the Belarusian ruble.

She believes that the position of the national currency of the neighboring country depends largely on the geopolitical situation, as well as on whether Moscow will take administrative measures, which will affect the Russian ruble rate.

- The Central Bank of Russia is unlikely to specifically set a lower rate of the Russian ruble," said the expert. - As for the near future, at least for the summer period, there is again a lot of uncertainty. That is, if we take even geopolitical expectations, it is difficult to say anything here. That is, how exactly the situation will develop in geopolitical terms, the exchange rate of the Russian ruble may swing one way or the other. That is, either to weaken or strengthen.

Another factor that will affect the rate of the Russian ruble (and the Belarusian ruble) is the situation with foreign trade in Russia, says Anastasia Luzgina.

"It depends on how the situation with energy costs will develop, as well as how the sanctions will work. This will also have an impact on the Russian ruble," the economist added. - Most likely, we'll see a smooth reversal of the Russian ruble downward.

According to the expert, the situation in the Russian fx market will also affect the Belarusian one - our national currency will also gradually give up its position against the dollar.

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