Belarus plans to widen its currency peg to the dollar to a small basket that would include the dollar, the euro and the Russian rouble, according to central bank policy draft papers seen by Reuters.
The ex-Soviet state only switched to the dollar peg this year, scrapping a previous Russian rouble link, but since the United States slapped sanctions against a major Belarussian firm the dollar's importance in foreign currency earnings has fallen.
"Tying the rate of the Belarussian rouble to a system of foreign currencies will help to achieve greater stability for the effective nominal rate of the Belarussian rouble," read a draft of the bank's monetary policy for next year. It said such a basket would make sense because of the greater proportion of euros and Russian roubles in foreign trade accounts.
The bank also sees the national currency fluctuating against the dollar in a 10 percent band, and slightly firming to 2,100 roubles per dollar at the end of next year from 2,112 roubles now. The United States, critical of the government's human rights record, forbade Americans from doing business with oil refiner Belneftekhim last November. The firm's business was responsible for a third of Belarus' foreign currency earnings.
Now the portion of Russian roubles, dollars and euros in the foreign trade account is about 30 percent each. Dollars used to account for 50 percent before the sanctions. The policy draft also showed that the bank aimed to raise its key refinancing rate to 11-14 percent by the end of the year, from 10.25 percent now.
Belarus, like many countries in the region, is battling high inflation due to soaring food prices and energy costs - Russia raised the price of its gas sold to Belarus to $128 per 1,000 cubic metres from $100 last year, when the price was doubled. Accumulated price rises over the first six months of the year reached 7.3 percent and the government now expects inflation of over 14 percent by year-end.