NBB buying foreign currency to prevent ruble appreciation
MINSK. July 19 (Interfax) - Net foreign currency supply on the Belarusian domestic market amounted to $1.2 billion against net demand of $1.8 billion in the same period of 2011, the National Bank of Belarus said in a press release.
The National Bank also said it was containing Belarusian ruble appreciation by buying net supply of foreign currency on the domestic market. "To prevent surplus appreciation of the Belarusian ruble the National Bank has been forced to acquire foreign currency [in the first half on the domestic market]," the release says following an extended National Bank management meeting on Wednesday.
The main aim of National Ban policy on the currency market in the first half of 2012 was "to smooth any sharp fluctuations in the ruble exchange rate."
The total volume of net foreign currency supply was the result of net sales by companies (not including banks) of $1.3 billion in the first half (compared to net buying of $0.7 billion in the first half of 2011) and by individuals of $0.5 billion (net purchase of $0.7 billion). The National Bank of Belarus did not provide figures for foreign currency deals by banks on the domestic market.
Net demand by non-residents for foreign currency amounted to $0.4 billion. Individuals became net buyers of cash foreign currency for the first time this year in June. Net demand for cash foreign currency from individuals amounted to $17.5 million, compared to net sales of $123.5 million in May, $210.3 million in April, $126.7 million in March and $194 million in February.
Net foreign currency supply on the domestic market is formed through the foreign trade surplus, which follows unprecedented Belarusian ruble devaluation in 2011. "The fast growth in exports and increased foreign trade balance became the basis for increasing corporate foreign currency supply and maintaining a steady situation on all segments of the domestic currency market," the release says.
Net buying by the National Bank of Belarus helped boost gold and foreign currency reserves, which rose 5.2% in the six months, or by $413.6 million. The reserves alos include a $440 million loan tranche from the EurAsEC AntiCrisis Fund, which was received in June.
The difference between the amount of net foreign currency buying and the tranche on the one hand and the relatively small increase in reserves on the other is due to "the government and National Bank redeeming foreign currency obligations before domestic and foreign creditors on time."
The National Bank of Belarus returned $1.1 billion in foreign currency deposits to commercial banks ahead of schedule in the first half of 2012.