Belarus rouble seems headed back towards record low

The Belarus rouble last week had pared a part of the big December fall, but the currency seems lacking momentum to continue the reversal with inflation remaining high and trade scenario weakening further.

Belarus has taken several unusual measures like sharply hiking the interest rates, ending the over-the-counter forex trading to shield its economy from the spillover effect of the crisis in Russia, its close ally.

USD/BYR jumped by 300 to 14,319 on Monday, moving further off the 7 January low of 13,658.

The Belarus rouble had fallen nearly 25% in December as the National Bank of Belarus had imposed a 30% tax on buying foreign currency.

The losses in rouble extended early January taking the dollar to as high as 14,827 roubles before seeing a correction as the central bank later lowered the tax to 10% for companies and scrapped entirely for individuals last week.

That correction now seems over with data remaining negative and the government still not adequately focused on strict fiscal discipline.

Belarus will keep its budget socially-oriented despite financial challenges, said Vice Premier Natalia Kochanova on Monday, showing weakening outlook for fiscal health of the country.

Inflation rate in Belarus stood at 16.2% in 2014, little changed from 16.5% in 2013, the National Statistics Committee of Belarus said on Saturday.

Belarus's trade surplus was $604m (£398m) in the January-November period, sharply down from $1.8b in the same period a year ago, the central bank said over the weekend.

A council of ministers will make an action plan for the government by mid-February; the new prime minister Andrei Kobyakov was given two months time to draft it.