The National Bank Is Worried For A Reason

• 9.07.2025, 18:24

Why demand for foreign exchange set a record in June.

In early July, the National Bank boasted of unprecedented foreign exchange reserves. Their growth was the result of an abnormal situation, when the supply of foreign currency in April and May was much higher than the demand, given the growing deficit of foreign trade. But the happiness was short-lived. Demand for currency in June set a record, writes planbmedia.io.

Demand for currency in June was a record both from companies and from the population. However, if people sold more currency than they bought, the enterprises - on the contrary. Over the month, they bought $3.8 billion in foreign currency, while sold a little less than $3 billion. As a result, the net demand for foreign currency in June amounted to almost $450 million.

And this is a natural state for the Belarusian fx market, when the trade deficit also sets records. Over four months, the negative balance in trade in goods and services amounted to $856 million. The deficit in trade in goods for five months rose to $2.6 billion. It is natural that Belarusian companies buy more foreign currency than they sell, if they can't earn it in foreign markets.

The opposite situation was unnatural, when in April and May, the supply of currency was higher than the demand. Especially in April, when Belarusian companies sold a record $3 billion, while they bought only $2.7 billion, while the trade balance was deeply negative even then.

As a result, in April and May, the surplus in the foreign exchange market was more than a billion dollars. And this surplus allowed the National Bank to replenish its reserves up to $11.5 billion.

The National Bank has not commented on the reasons for such an amazing situation, inexplicable within the framework of conventional economic logic. But the Belarusian economy, as we know, is not up to the laws. Therefore, the phenomenally high supply of currency could be explained by the specifics of Belarusian economic relations.

For example, by the fact that some large investors were forced to additionally invest their profits in the Belarusian economy. To pay for the right to stay in this economy further. Or, on the contrary. A ransom for the right to leave it. It is not for nothing that Lukashenko demanded to take extraordinary measures to prevent the withdrawal of money abroad and to return the money that had already managed to withdraw.

But the peculiarity of extraordinary measures is that they can't be applied permanently. And then either investors will run out, or investors will run out of money. So in June, the Belarusian currency market returned to its natural state.

And this explains why the National Bank suddenly raised the refinancing rate, afraid of growing consumer imports. Because the National Bank knew exactly where all this prosperity had come from in the Belarusian currency market. And realized that it would not last long.