What happens to the exchange rate of the Belarusian ruble due to the oil war between Russia and the Saudis

February seriously undermined the ability of national Bank to maintain the exchange rate.

The game against the NBRB market was worth 0.5 billion USD per month of trading. How high is the pain threshold of the authorities, after which the course will go into a chaotic swimming? Write about it banki24.by.

On Friday and Saturday, several events occurred that greatly affect the exchange rate of the Belarusian ruble in the short term. First, on Friday a resounding failure, ended the meeting of the countries-exporters of oil of the OPEC in the format+. Parties are unable to agree on the extension of restrictions on the production of black gold even for the next quarter.

The main stumbling block was the position of the Russian government. Russian officials believe that their country has more to lose from the extension of the restrictions than gains. Russia’s Finance Minister Anton Siluanov said that “the Saudis, the situation is much worse.” According to Siluanov, due to the record gold reserves and accumulations in reserve funds of the Russian Federation will be able to win in a price war with the monarchies of the Persian Gulf.

According to the head of Ministry Alexander Novak, the RF output of the oil agreement OPEC+ will allow Russian companies to increase production by 0.3 million barrels per day. Because of the failure of Friday’s talks, the limits on the world oil market will be removed after 3 weeks from 1 April.

Meanwhile, Saudi Arabia has dealt the first blow to Russia. Bloomberg reports that the Saudis can increase production from the current 9.7 to 12.5 million barrels per day and it is much more than Novak to RF. In addition, the extraction of synchronous raise the remaining monarchies of the Persian Gulf. Together with Saudi Arabia they are supplied in amount of 14 million barrels a day.

State company Saudi Aramco announced unprecedented discounts to buyers of Arab oil to Europe. Since April, the Arab Light grade will sell at a discount to Brent indicative 10,25 USD per barrel. Last week exchange trades on Brent crude closed at for 45.48 USD per barrel. Thus, the Saudis offer European consumers a discount of more than 20% from current prices.

According to Bloomberg, the same tactics will follow the other oil monarchies of the region. The American edition believes that the Saudis throw the gauntlet to Russia and intend to oust the position of the Urals in the European market.

Meanwhile, in Belarus, the national Bank revealed statistics about the size of the gold reserves and the situation on the currency market. In February, the official reserve assets decreased by 438,2 million USD. However, the decline in reserves was partially mitigated by rising gold prices. With the exception of the NBRB gold lost more — 475,6 million USD. Just over a month, the regulator has lost almost 5% of gold reserves. According to the calculations of the national Bank, for 2 months in 2020, the government and the NBRB paid in foreign currency debt of USD 940 million (compared to USD 1.081 bn in the same period in 2019). The size of the gold reserves since the beginning of 2020 decreased by USD 589 million, while in 2019 — only 62 million USD.

This suggests to the decrease of gold reserves led to the purchase of currency on the domestic market. In a press release on the state reserves, the national Bank indicated that it had ceased to be a buyer of currency and has become a seller. The exact size of demand for the currency is difficult to establish: the NBRB deliberately publish limited amount of statistics and partial data.

While it is possible to say that the population of 3 consecutive months is a net buyer of currency. During this time, individuals acquired from banks 216 million USD. In February, the net demand for cash currency has set a record for 54 months.

Individuals are not bought so much currency since the collapse of the ruble in August 2015. A resident enterprise show the net demand for foreign currency 4 months in a row. During this period they bought from the banks 497 million USD. In General, the situation of excessive demand in the foreign exchange market for banks and the NBRB was the worst since August-2015.

Until the end of March the supply of currency on the domestic market is likely to remain limited. Saved small download of a raw material refinery, there is no contract for the supply of potash fertilizers to China, there is a drop of product marketing giants of the type BelAZ and Gomselmash. Due to adverse market conditions, the Ministry of Finance has postponed placement of Eurobonds.