In some sense this is ignored by most people but Belarussia right now is undergoing a severe inflationary/devaluation spiral.
Telegraf.by - Belarusian Money Cheaper than Paper
October 20th the dollar rose by 52% in relation to the belruble exchange rate wise...
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The article asically states that belruble went from 3000 to 8600+ from start of 2011 untill now or devalued by 189%. Blame is placed on high energy prices, my guess is the rigid economy simply cannot absorb the shock and the inefficiency built in where people can't be fired forces the money to absorb the shock.
I can totally see them fixing this with rublerizing ergo switching to the russian ruble.
New Age | Newspaper
They apparently free floated it but the problem is the economy not being able to adjust and it is doing so through the currency. (Some enterprises have to go out of business and be shut down because they operate on a negative profit but since state owned the state eats the compound negative loss until everything is so inefficient that shut down[collapse] is cheaper than any other alternative)
There was an offer recently to Ukraine to settle its' gas debt and other energy costs with Russia by paying in Russian rubles, not sure how it would go but its' possible it would de-intermediate the dollar settlement in that exchange. I can totally see it happening in the case of Belarussia, especially since it is very isolated and this would solve the problem of currency flows. However, being in sync with Russia (currency wise) will further integration/dependency to the point where segregation of fiscal powers would be impossible. (They won't be able to devalue unless Russia devalues, sets rigid wages to some degree and the only ability to regulate would be to create capital formation incentives).
Rant over...
Telegraf.by - Belarusian Money Cheaper than Paper
Belarusian Money Cheaper than Paper
This year Belarus is experiencing the highest inflation rate for the last 10 years. Economists weekly record a decline of purchasing power of the national currency. Ordinary citizens also can't but notice this when buying food and paying utility bills. The Belarusians see the money gradually losing its real value. Thus, Telegraf correspondents have calculated that even paper is more expensive today than rubles.
For example, a packet of plain paper of 500 sheets costs Br75 thousand. Thus the price of a paper sheet is Br150. At the same time a standard sheet of A4 paper fits only 9 ten-notes (bills of the smallest denomination). Accordingly, a sheet of plain paper is almost 67% more expensive than a sheet of ten-notes of a similar format.
As Telegraf previously reported, Belarus is still ahead of the CIS countries and Europe in inflation rate. In August, inflation in Belarus was 8.9%, and 53.6% YTD. However prices rose by another 10.5% during September 1-20.
The ever-increasing inflation rate in Belarus is now added by a record devaluation of the national currency. It exceeded 80% in September. Moreover, according to World Bank data, it has broken a record for the past 20 years.
The ruble devaluation leads not only to higher prices of imported goods in rubles, but also to reduction of the ruble purchasing power. So, after September 14, when the Belarusian Stock Exchange launched an additional session, the Belarusians' average salary has fallen by $135 - from $350 to $215.
This year Belarus is experiencing the highest inflation rate for the last 10 years. Economists weekly record a decline of purchasing power of the national currency. Ordinary citizens also can't but notice this when buying food and paying utility bills. The Belarusians see the money gradually losing its real value. Thus, Telegraf correspondents have calculated that even paper is more expensive today than rubles.
For example, a packet of plain paper of 500 sheets costs Br75 thousand. Thus the price of a paper sheet is Br150. At the same time a standard sheet of A4 paper fits only 9 ten-notes (bills of the smallest denomination). Accordingly, a sheet of plain paper is almost 67% more expensive than a sheet of ten-notes of a similar format.
As Telegraf previously reported, Belarus is still ahead of the CIS countries and Europe in inflation rate. In August, inflation in Belarus was 8.9%, and 53.6% YTD. However prices rose by another 10.5% during September 1-20.
The ever-increasing inflation rate in Belarus is now added by a record devaluation of the national currency. It exceeded 80% in September. Moreover, according to World Bank data, it has broken a record for the past 20 years.
The ruble devaluation leads not only to higher prices of imported goods in rubles, but also to reduction of the ruble purchasing power. So, after September 14, when the Belarusian Stock Exchange launched an additional session, the Belarusians' average salary has fallen by $135 - from $350 to $215.
Google Translate
The article asically states that belruble went from 3000 to 8600+ from start of 2011 untill now or devalued by 189%. Blame is placed on high energy prices, my guess is the rigid economy simply cannot absorb the shock and the inefficiency built in where people can't be fired forces the money to absorb the shock.
I can totally see them fixing this with rublerizing ergo switching to the russian ruble.
New Age | Newspaper
They apparently free floated it but the problem is the economy not being able to adjust and it is doing so through the currency. (Some enterprises have to go out of business and be shut down because they operate on a negative profit but since state owned the state eats the compound negative loss until everything is so inefficient that shut down[collapse] is cheaper than any other alternative)
There was an offer recently to Ukraine to settle its' gas debt and other energy costs with Russia by paying in Russian rubles, not sure how it would go but its' possible it would de-intermediate the dollar settlement in that exchange. I can totally see it happening in the case of Belarussia, especially since it is very isolated and this would solve the problem of currency flows. However, being in sync with Russia (currency wise) will further integration/dependency to the point where segregation of fiscal powers would be impossible. (They won't be able to devalue unless Russia devalues, sets rigid wages to some degree and the only ability to regulate would be to create capital formation incentives).
Rant over...
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