Abolishing mandatory sale of foreign currency earnings will mark stabilization on foreign exchange market

The National Bank of Belarus in early July will discuss plans to abolish the mandatory sale of foreign currency earnings by business entities. Currently, enterprises are required to sell one third of foreign currency from received foreign currency earnings. This rule has been introduced in 1992 in order to regulate foreign currency market amid limited international reserves. If this rule is abolished, the financial burden on exporters will be reduced and so as their freeing exchange losses. Banks, however will lose some profits from currency exchange operations on forex and volatility on the currency market will increase. The difference between the buy and sell rates of foreign currency will increase too. Alternatively, the authorities may decide to lower the requirement and gradually reduce the sale from 30% to 0%. If the mandatory sale of foreign currency is waived, this will mean that the currency market has stabilised.