Belarusian money supply doubles in 10M due to devaluation
MINSK. Nov 14 (Interfax) - Broad money supply in Belarus doubled in January-October 2011 to 104.154 trillion Belarusian rubles, the National Bank of Belarus reported.
Money supply grew 32% in October due to the second sharp devaluation in the official exchange rate after growing 10.4% in September. The first major devaluation occurred in May, when the money supply grew 26.7% for the month.
Thus, because of the Belarusian ruble's devaluation in 2011, the currency component of broad definition money supply grew proportionately and resulted in a sharp reduction in units of national currency. As of November 1, the Belarusian ruble slightly exceeded one-third (36.8%) of the country's total money supply, down from 52.6% at the beginning of the year.
There was a sharp reduction of cash in circulation (M0) in October after September's spasmodic growth, and as a result the volume of cash returned to September's level. This was the main reason behind the ruble money supply's (M2) reduction in October, which had grown continuously over the year before that point. Also in October, there was a rapid recovery in the volume of demand deposits in foreign currency due to a visible slowing of growth in demand deposits in Belarusian rubles caused by the sharp devaluation. However, Belarusian ruble deposits have not yet reached their value for the beginning of the year.
Cash in circulation stood at 6.721 trillion Belarusian rubles on November 1, having fallen 13% in October after increasing 15.1% in September. M0 increased 50% over the ten months. It had fallen to 6.5% of money supply as of November 1 (9.8% on October 1) from 8.9% on January 1.
M1 money supply, which includes cash and current ruble accounts with banks, was at 18.53 trillion Belarusian rubles on November 1, up 35.6% over January-October. M1 money supply fell 2.5% in October after a 5.5% increase in September. Current ruble deposits grew 28.8% over the ten months (up 4.7% in October) to 11.809 trillion Belarusian rubles. M1 supply represented 11.3% of broad-definition money supply as of November 1 (27.5% on January 1).
M2, which in addition to M1 includes demand ruble deposits and funds in ruble-denominated securities held by private and legal entities, had increased 45.2% in January-October (down 0.7% in October) to 38.375 trillion Belarusian rubles by November 1. Demand ruble deposits amounted to 17.756 trillion Belarusian rubles, up 51.3% over the ten months (0.9% in October, 12.2% in September). They included private deposits of 8.372 trillion Belarusian rubles (up 19.9% in January-October, including 5% in October), and corporate deposits of 9.384 trillion rubles (up 97.3% in January-October, including a decrease of 2.4% in October).
The volume of ruble-denominated bonds issued by banks increased 2-fold in January-October to 2.1 trillion Belarusian rubles.
M2 money supply - money supply in national definition (excluding funds in ruble-denominated securities held by private and legal entities) stood at 36.286 trillion Belarusian rubles on November 1, up 42.9% over the ten months (down 0.9% in October).
Ruble money supply as a proportion of broad-definition money supply was at 36.8% on November 1 versus 49% on October 1, 49.5% on September 1, 50.1% on August 1 and 52.6% on January 1.
The increase in money supply 'dollarization' in Belarus prompted by national currency devaluation also reflects an increase in the proportion of forex deposits over the ten months to 59.2% from 44% on January 1. The ruble equivalent of forex deposits grew 2.9-fold over the ten months (63.9% up in October, 11.3% up in September) to 61.608 trillion Belarusian rubles.
In the dollar equivalent, forex deposits were at $7.291 billion on November 1, having contracted 1.1% over the ten months (up 9.4% in October and 0.9% in September).
Demand accounts in foreign currency stood at $5.403 billion on November 1, having contracted 5% over the ten months and having grown 12% in October, 0.7% in September and having fallen 1.1% in August. That included such deposits by private citizens - $3.676 billion (down 11.6% in January-October and up 9.7% in October) and by legal entities - $1.727 billion (up 12.9% and up 17.1%, respectively).
Broad-definition money supply (M3) expanded 31.9% in 2010, the ruble money supply (M2) 27.4%. This year, based on projected GDP growth of 9%-10% and inflation of 7.5%-8.5%, the National Bank of Belarus estimates the broad-definition money supply will grow 25%-28%, the ruble supply 27%-29%.
Inflation was 88.7% in Belarus in January-October.
The official exchange rate for November 14: 8,850 Belarusian rubles/$1.