Belarus' Gold Reserves Update Historical Record -National Bank Gives Reasons

Belarus's gold and foreign exchange reserves have once again reached a historical record.

Over the past few months, the growth of reserves has become a steady trend, despite the fact that the external environment remains far from ideal. As a result, on June 1, the volume reached the figure of $11 billion $158 million.

Thus, it added almost $216 million over the month. According to First Deputy Chairman of the National Bank Alexander Egorov, there are several components of the 'cash cushion' increase. And it's not only due to the rise in the cost of gold. Although, it plays an important role. But even the decline in prices of precious metal will not significantly affect the reserve piggy bank.

Belarus has reached a new historical maximum: gold and foreign exchange reserves amounted to $11.158 billion as of June 1. "More important is not the absolute value of this figure, but still the ratio with our foreign trade. And it's already 2.6 months of imports," Alexander Egorov noted.

According to him, the combination of several factors allowed to increase gold and foreign exchange reserves. The first is the investment policy: it's important what instruments to invest gold foreign exchange reserves in. The second is the interest rate policy with regard to individuals. The third is the interest rate policy with regard to legal entities, including reasonable limitation of money supply, which allows ensuring the balance of currency flows.

"The National Bank pursued a consistent policy of investing part of the gold and foreign exchange reserves in gold. The growth in the price of gold per troy ounce since the beginning of the year allowed increasing reserves by about $1.1 billion. The second important factor, of course, was the purchase of foreign currency in the domestic market. And here we can single out several factors - first of all, the consistent interest rate policy, which shows to the population the saving preference of the Belarusian ruble over foreign currencies. This made it possible to ensure net sale of foreign currency by households - a little over $400 million since the beginning of the year. Another important factor is the net sale of foreign exchange by non-residents. This is about 0.5 billion dollars. Since April-May, legal entities have also provided a net inflow of foreign currency into the country," Alexander Egorov said.

As for the deposit market, the National Bank expects a more significant difference in interest rates on long and short-term deposits. According to the regulator, they will gradually decline in the near future for short deposits, while for long ones they will remain at the current level. Today, more than 84% of deposits are irrevocable, with a term of more than a year.