Belarus’s ruble plunged to a record low, following a drop in its counterpart in Russia, the country’s main trading partner, as falling oil prices and a weakening economic outlook spread pain across the region.
The result of trading posted by the Belarusian Currency and Stock Exchange on its website on Monday was 17,601 at 11:59 a.m. in Minsk, or 4.9 percent weaker than Friday’s result. The currency has lost more than 33 percent this year, according to data compiled by Bloomberg, making it the worst performer of more than 155 currencies the system tracks.
Belarus is the latest country to suffer contagion from Russia’s economy, which is mired in its first recession since 2009. Undermined by the lowest oil price in six years and sanctions over the conflict in Ukraine, Russia’s ruble slid to 70.912 against the greenback at 3:59 p.m. in Moscow on Monday, its eighth day of decline and its weakest level since January.
“The devaluation is no surprise as the Belarusian ruble follows the oil price and, respectively, the Russian ruble, which itself is testing new limits,” Vladimir Osakovskiy, chief economist for Russia at Bank of America Corp. in Moscow, said by e-mail. “This is caused by the high dependence of Belarus on Russia.”
Russia’s economic woes have also hit Kazakhstan, where officials floated the tenge last week, triggering a 22 percent slide to a record low against the dollar. The tenge strengthened on Monday by more than 4 percent on speculation that companies and individuals were selling dollars they had hoarded last week to pay taxes.
While it doesn’t export any significant amount of crude, Belarus depends on its exports of refined oil products and the economic performance of Russia, the world’s biggest energy exporter, making it the world’s third most oil-dependent economy after Libya and Singapore according to Bloomberg estimates.
Belarus’s foreign currency reserves have shrunk to $4.7 billion this year, preventing it from propping up the ruble as foreign debt payments peak. As a result, the exchange rate is now “in essence” determined by the market, according to the central bank.
President Alexander Lukashenko, who has held power in Belarus for more than 21 years, is walking a fine line amid political and economic challenges as he plans to run for his fifth term in office during an Oct. 11 election.
In a bid to unblock ties with the U.S., which may help jumpstart negotiations for a new loan from the International Monetary Fund this year, Lukashenko pardoned six people regarded by human rights watchdogs as political prisoners on Saturday, including a former presidential candidate who had been kept behind bars since the 2010 election.