Russian rouble crisis sparks run on Belarus currency

An employee of a local company, producing equipment for electrical meters, counts Russian rouble banknotes in Stavropol, southern Russia on Dec 17, 2014. -- PHOTO: REUTERS
An employee of a local company, producing equipment for electrical meters, counts Russian rouble banknotes in Stavropol, southern Russia on Dec 17, 2014. -- PHOTO: REUTERS

MINSK (AFP) - Belarussians were in a panic on Friday over the Russian rouble's plunge, rushing to convert their savings to dollars and euros as they fear a devaluation of their currency.

The run on the Belarussian rouble forced the central bank to announce a "temporary" tax of 30 per cent on all purchases of foreign currency.

The bank also required all exporters to convert half of their foreign revenues into local currency.

Interest rates were raised to encourage Belarussians to keep their money in their bank accounts, according to a statement published Friday on the central bank's website.

The Belarussian rouble is not officially pegged to the Russian currency, but the former Soviet country's economy is heavily dependent on its giant neighbour.

Russia, which derives about half of its revenues from energy exports, is ailing under the double whammy of plunging crude prices and Western sanctions.

Its currency has lost about half of its value since the beginning of the year.

Belarus's authoritarian leader Alexander Lukashenko admitted that his country's economy has been hard hit, as 42 per cent of its exports are bound for Russia.

Nevertheless, he insisted that Belarus can withstand the turbulence.

"We would like to get through this period calmly. So far we have the strength for this," he said, according to state news agency Belta.

'DON'T WORRY'

"Don't rush like crazy with the (Belarussian) rouble to exchange points and don't change it for foreign currency, don't trade it, because it will have consequences," warned Lukashenko.

"Don't worry, whatever happens in our country, we will stabilise in half a year thanks to the system that we have created in Belarus," he added.

"If someone inside or outside our country - and this panic is being created in our country exclusively under the pressure of outside circumstances - wants to destabilise us, they won't manage it," said the President.

Belarussians have already experienced a dramatic economic crisis in 2011 with a series of devaluations of the currency and galloping inflation.

On Friday, several foreign exchange offices were shut, having ran out of cash, and some people had to queue for two hours to withdraw funds at banks.

The Belarus rouble was trading 8 per cent lower on Friday compared to a day ago, while the stock exchange was closed.

The current panic "is explained by the loss in value of the Russian rouble and rumours of an imminent devaluation of the Belarussian rouble," said economist Vladimir Tarasov.

"At the moment, the crisis is only technical: the banks were not ready to respond to such a demand for foreign currency. But in the days to come, it could become a major financial crisis if Russia does not give it several billion dollars in aid," he added.

The IMF lent Minsk US$3.5 billion in 2009 but refused to give it further support since 2011 as Belarus refused to implement the liberal reforms and impose the budgetary cuts it demanded.

Russia has been lending to Belarus, including US$450 million (S$590 million) in January and US$2 billion in May to keep the country afloat.