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The Belarus Devaluation…

May 23, 2011

I was doing some research on the Belarus devaluation, in which today they dropped the value of their currency by 36%after a 10% slice earlier this year. They did this buy changing the number of rubles a dollar is worth (3155->4930). The interesting thing here is that it seems almost everyone was up on it:

“The new rate, although significantly below the previous one, is still not as low as the “black market” exchange rate, where the cash exchange migrated amid the country’s severe shortage of foreign currency.”

In fact you can go back to March where analysts were saying there was no way out for Belarus, the trade deficit was too high. They, like the US and A, buy a lot more crap then they produce. Here was the writing on the wall:

“On March 22, UniCredit Group’s Russia subsidiary said it had temporarily halted the purchase and sale of the Belarussian ruble, the same day Belarus’ central bank stopped selling foreign currency to the country’s banks. “We ask you until further notice not to send us requests for purchasing or selling Belarussian rubles,” UniCredit’s Russian unit said, Dow Jones reported. ”

They wouldn’t give away the foreign currency because they knew they were going to devalue the ruble, instantly making all the other currencies in their reserves that much more valuable. The citizens knew this, at least a bunch of them and took some action:

The “black market exchange”:
“Three weeks ago, a young programmer who preferred to be identified simply as Petya came up with what appeared to him as “an obvious idea.” Over one weekend he built a website that already attracts about 15,000 visitors a day and has at least four copycats.

The website’s name,, mocks the name of the Belarus central bank’s head Petr Prokopovich and offers what the central bank can’t—convertibility of the Belarussian ruble.

A visitor to the website who wants to buy or sell an amount in U.S. dollars browses through the ads posted by other visitors, finds someone seeking to sell or buy the same amount, and gets in touch with that person. The parties to the transaction can then either exchange the money in an agreed place at an agreed rate, or, if they prefer official security, can go to one of the idling exchange booths.

In order to prevent the booths from stockpiling dollars and euros, the government has ordered them to immediately sell, at the official rate, whatever currency they buy from people, even though the number of people wanting to sell their dollars at the official rate is tiny. The solution: the buyer pays the seller the difference between the official and unofficial rates in cash.”

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