Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Bretton Woods system wikipedia , lookup
Reserve currency wikipedia , lookup
Currency War of 2009–11 wikipedia , lookup
International monetary systems wikipedia , lookup
Currency war wikipedia , lookup
Foreign exchange market wikipedia , lookup
Purchasing power parity wikipedia , lookup
Foreign-exchange reserves wikipedia , lookup
Fixed exchange-rate system wikipedia , lookup
National Currency of the Republic of Belarus Prepared by Darya Makarchyk After the breakup of the Soviet Union in 1991 and after more than two years of using its currency and coupon system the new national currency with the old name Ruble was officially adopted. But due to the increase of inflation during the printing and adopting of new currency, the face-value was considered ten times as much as it was written on the banknote. That’s why the first denomination took place in august 1994, only in a year after the adoption of new currency and without the issue of new banknotes. The second denomination was in the January 2000 with three zeros removed. The third denomination is being prepared, but will not be realized until the inflation rate is less than 10%. Prices before denominations 1994 (Jul.) 1999 (Dec.) 2014 (Aug.) Prices (BYR) Milk (1l) 2 500 Bread 1 500 Potatoes (1 kg) 1 000 Milk (1l) 35 000 Bread 30 000 Potatoes (1 kg) 25 000 Milk (1l) 10 000 Bread 9 500 Potatoes (1 kg) 4 000 Average wages 815 459 34 871 899 6 364 471 Source: National Statistical Committee of the Republic of Belarus. – Access mode: http://belstat.gov.by/en/ The policy pursued in the country in 1995 – 2014 is characterized by the variety of instruments for the exchange rate adjustment. One of the differences between the Republic of Belarus and other CEECs was the use of multiple exchange rates at the initial stage during several years. 1993-1995 – floating exchange rate In 1993 the National bank of the Republic of Belarus started to use the floating exchange rate regime with the interventions. The floating exchange rate was chosen due to: high inflation rate (1290,2% in 1993, 2321% in 1994, 809,3% in 1995); lack of freely convertible currency; lack of monetary reserves and absence of gold reserves; increase of trade deficit. 1995-1996 – fixed exchange rate After the presidential election in 1994 the government established a programme, the main purpose of which was to reduce the inflation and create the conditions for future economic growth in the country mainly with a help of fixed exchange rate. Government interventions in the functioning of financial markets resulted in the formation of parallel foreign-exchange market. At the end of 1996 the difference between the official and parallel market exchange rates was more than 40%. This led to the decrease of industrial efficiency, investments in GDP and the increase of trade deficit. 1996-2000 – managed float The exchange rate was determined by the National Bank according to supply and demand for foreign currency taking into account the rate of inflation. In 2000 the National Bank toughened the monetary policy and started the systematic devaluation of the official exchange rate of roble which equaled to 110,9% in the first half of 2000 and 268,8% for the whole year. 2000-2009 – sliding peg Since 2000 the exchange rate of ruble linked its value to the Russian ruble and U.S. dollar because of the: 1) high share of Russia in the structure of foreign trade and high rate of dollarization of the economy; 2) necessity to create the prerequisites for the adoption of common currency with Russia; 3) necessity to reach the smooth and predictable dynamics of the Belarusian ruble exchange rate. 2009 – 2011 – link to currency basket which included the Russian ruble, Euro and U. S. dollar in equal shares that allowed to smooth the exchange rate fluctuations and ensured the stability of the exchange rate within the fixed corridor. 2011 – flexible exchange rate Last years the economy of the Republic of Belarus was confronted by the number of difficulties like the increase of prices for power resources (from 2006 to 2010 the prices for gas went up by 3,9 times, for oil – by 1,7 times), world economic crisis that resulted in the decrease of the external demand and of prices for exported goods. The monetary policy was aimed to prevent the sharp decrease of production, bankruptcy of enterprises and increase of unemployment. But the adjustment of monetary policy was inevitable in the context of the crisis of 2011 in the Republic of Belarus. With the beginning of the crisis the excessive domestic demand stimulation and fixed exchange rates resulted in the increase to 24 % of deficit of the current account of balance of payments in the first quarter of 2011. To maintain the exchange rate of the ruble the National Bank exhausted the main part of its currency reserves. Figure 1 - BYR/USD (taking into account denomination in 2000) 10000 9510 9000 8350 8570 8000 7000 6000 5000 4000 3000 3000 1920 2000 2170 1180 1000 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1998 1997 1996 1999 320 11,515,5 1995 0 In March 2011 the control of the capital flow led to the emergence plurality of exchange rates. On the 24th of May the Belarusian ruble was devaluated by 56%. At the same time the market exchange rate was even lower. In the October 2011 the plurality of exchange rates was eliminated and the exchange rates were unified. The new exchange rate on the 21th October was 8680 rubles compared to 5720 rubles the day before. The devaluation of currency amounted to 52 % (Figure 1). Source: National Bank of the Republic of Belarus. – Access mode: http://www.nbrb.by/. Figure 2 - Rate of inflation (%) 300 Currently one of the main purposes of the monetary policy of the National Bank is the reduction of the inflation rate to the 11% in December of 2014. In the whole, during the last years the inflation rate corresponds to the predictable one (Figure 2). 250 244 200 150 100 50 0 108,7 107,5 46,1 14,4 21,8 6,6 16,5 9,9 Source: National Statistical Committee of the Republic of Belarus. – Access mode: http://belstat.gov.by/en/ The exchange rate of ruble is determined according to demand and supply, but the National Bank still has the right to intervene in this process through the purchase and sale of currency. The situation in the national economy and in monetary and credit sphere is quite stable. References: 1. National Statistical Committee of the Republic of Belarus. – Access mode: http://belstat.gov.by/en/ 2. National Bank of the Republic of Belarus. – Access mode: http://www.nbrb.by/ 3. Alymov, U. V. About the way to the uniform exchange rate of the Belarusian ruble. - Bank Bulletin Magazine. – 2011. - №11. - Access mode: http://www.nbrb.by/bv/arch.asp?id=540. 4. Gavrilov, V. Currency market in the Republic of Belarus: state diagnostics. – Bank Bulletin Magazine. – 2002. - №5.