Interest rates on the Belarusian interbank market now tend to be close to 20% per annum while they averaged over 60% in late July. The deficit of ruble liquidity is being replaced with a surplus, BelTA has learned.

According to the National Bank of the Republic of Belarus as of 13 August (the final trade day), the interest rate on ruble overnight loans for residents averaged 21% per annum while the figure was 21.3% on 12 August and 34% on 5 August. As much as Br849.6 billion, Br990.75 billion and Br1.15 trillion in overnight loans was traded respectively.

Interest rates on the Belarusian interbank market had been on the rise since 12 July. As of 24 July the average interest rate on ruble overnight loans for residents peaked at 60.9% per annum while it was as low as 21.7% per annum on 1 July. The interest rates started declining on 25 July when they averaged 59.3%. To compare: the average interest rate on ruble overnight loans for residents on the interbank market was 17.9% in June, 18% in May, 18.5% in April, 18.6% in March, 29.7% in February, and 35.4% in January.

The decline of interest rates on the interbank market was possible thanks to the extensive support granted by the NBRB to commercial banks using dedicated instruments (lombard loans, two-way swap deals, swap auctions). Apart from that, the interbank market was stabilized thanks to a massive increase in interest rates on national currency deposits that attracted ruble resources of Belarusians. Some banks raised interest rates on ruble deposits up to a whopping 45% per annum, however, the interest rates on deposits shrank rapidly following the falling interest rates on the interbank market. At present the most profitable deposits offer interest rates as high as 35% per annum. Experts believe that interest rates on ruble deposits will stay rather high for some time.

The interbank market situation reflected the monetary management policy the National Bank of the Republic of Belarus employs when tensions on the currency market run high, pointed out Valery Polkhovsky, an analyst with the group of companies Forex Club. The expert said that when the forex market is in a bad shape, the NBRB reduces the availability of ruble resources, which results in poor liquidity of the banking system and hence higher interest rates on interbank loans in rubles. Once the currency market turns the corner, interest rates on the interbank market start falling. Keeping interest rates high on the interbank market is disadvantageous for the government because it inflates interest rates on ruble loans, resulting in slower economy growth, explained the analyst.

Yet experts believe that interest rates on the interbank market may once again reach 35% per annum in the second half of August. As from 14 August commercial banks have to once again meet reserve requirements of the National Bank. As of 14 August a new limit on mandatory reserves calculated as a percentage of foreign currency deposits (14% instead of 12%) is in effect, thus increasing the demand for liquidity.