FX market: This week swing change in the national currency rate is possible

In early November, same as it happened in early October at exchange trades was an increase in demand for foreign currency with some decrease in supply.

The reaction of the National Bank at this time was quite moderate: for a week the dollar against the Belarusian ruble has grown only by 2.9% and reached on November 4 8.75 thousand BYR/USD.

In October, the situation returned to normal only in the middle of the month, when the dollar at the extra session slightly passed a mark of 9 thousand BYR/USD.

It's very difficult to say, at what level the rate will stop this time, since there are new factors caused by the union of the basic and extra trading sessions at the Belarusian Currency and Stock Exchange. In addition, there is uncertainty regarding purchases of currency to pay for energy, in particular, that of Beltransgaz.

Without taking into account new factors to align demand and supply of currency, the National Bank, apparently, in mid-November would have to drop the ruble much more than in October, up to 9,5-10 BYR/USD.

However, last week according to the results of trading, the National Bank carried out fairly moderate foreign exchange interventions, not more than several million dollars per day. In this regard, the demand for foreign currency sometimes remained unfulfilled. Thus, on November 4 when the demand for euro was 30.6 million and supply 12.6 million, the volume of transactions amounted only to 13 million EUR. Demand for dollars on the same day was 54.4 million USD, supply 42.5 million USD, and trading volume 48.1 million USD.

Carrying out these small currency interventions, the National Bank can survive several weeks without a sharp weakening of the ruble.

In addition, there is a possibility to use an administrative lever: the state as the owner may postpone purchase of currency by large state-owned enterprises the importers. There is a third option - to pay for the purchase of energy at the expense of loans from EurAsEC or Belarusian potash plant.

This week the Belarusian authorities, apparently, should decide on possible actions. In this regard, swing change in demand or supply of foreign currency at exchange trades is possible.