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Will Belarusian banks withstand the increased demand for foreign currency?

Will Belarusian banks withstand the increased demand for foreign currency?

Clients of Belarusian banks began to massively withdraw funds from time-deposits, and the citizens’ interest in foreign currency increased sharply, Forbes reports. Belarusians have switched to the mode of accumulating money due to increasing uncertainty in the financial system, said the head of the Belarusian National Bank Pavel Kallaur.

Forbes discussed the current situation with representatives of various banks. At the beginning of the month, the demand for currency increased by 20%, and the volume of operations to withdraw money from accounts almost doubled, said representatives of MTBank. BPS-Sberbank also stated that the level of demand for currency transactions is slightly higher than usual. Bank “Dabrabyt” didn’t notice any drastic changes in the habits of its clients.

This is not the first time this interest in cash has occurred this year. It was first noted in March in connection with the Covid-19 pandemic. Even today, it is quite difficult to exchange a significant amount of money in the regions. In addition, the situation is warmed up by numerous info hypes that Belarus is expecting a default.

One of the Belarusian investors told the newspaper that some banks were forced to impose restrictions on the purchase of foreign currency, and today another wave is taking place.

The head of Lacerta, Ilya Bogdanov, said that interest in the currency is a kind of indicator of the mood in the country. If ATMs and exchange offices have long queues, then something is definitely wrong.

During the period from January to July of this year, citizens bought about $873.8 million (including the sale), Anastasia Luzgina, an expert at the Belarusian Economic Research and Education Center, analyzed. Most of the funds were purchased in February-March. Last year, the situation was the opposite: citizens were actively getting rid of foreign exchange, and the net sale reached $389.2 million. During the same period of this year, companies purchased $746 million, and last year it was sold about $414.8 million in foreign currency.

According to the statistics of the Belarusian National Bank, in July the volume of cash in free circulation reached 4.193 billion rubles, which is 12% more than since the beginning of the year. The volume of dollar deposits of citizens decreased from $7.157 billion to $7.1 billion. Svetlana Pavlova, an expert at Moody’s, is sure that there is still no information on the results of August, but there is indirect evidence of deposits outflow. She said that the surge in transactions in the interbank sector may indicate that companies don’t have enough cash. As a result, they are forced to replace them there.

Analysts are also confident that the outflow of more than 10% of deposits could cause a serious stressful situation for the country’s banking system. The outflow of funds from accounts also puts serious pressure on gold and foreign exchange reserves, which are already at a low level.

Despite all this, experts are confident that the situation remains stable at the moment. According to the National Bank, the banking sector’s liquidity as of August 18 amounted to 2.59 billion rubles, which is slightly more than $1 billion.

It should be noted that a significant part of banks in Belarus are subsidiaries of Russian banks, which can carry out additional capitalization in Belarusian banks. Accordingly, Belarusian banking organizations can face tough times.

S&P analysts point out that most of the irrevocable deposits are the main factor keeping the banking sector afloat. As of July 1, they account for 66.5% of the total volume of deposits.

National Bank experts are confident that the surge will be very prompt. “The average daily volume of deposits and demand for currency are moderate and don’t pose significant risks to the country’s stability,” the press service of the National Bank said. Also, representatives of the regulator noted that the bank has enough tools to assist the banking sector.


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