While American consumers enjoy unusually low gas prices for the 2014 holiday season, Russia’s oil-based economy is tanking, and its currency, the ruble, has plunged in value. Now, Agence France-Presse is reporting that Russia’s ruble crisis has spread across the border to neighboring Belarus, which relies on Russia’s economy for survival. ZeroHedge notes that the Belarusian ruble has fallen in value precipitously and that hyperinflation has begun to set in as consumers seek to ditch their national currency in favor of dollars through black market websites like DollarNash.com. A banking panic has also taken hold, as worried savers have begun to withdraw their life savings over fears that banks might collapse. The above-embedded video coverage by Ukraine Today summarizes the crisis, currently in progress.
The government of Belarus implemented harsh currency and financial controls over the weekend in an effort to stop the free-fall crash, including a 30% tax on currency exchanges, a 2-year restriction on Forex trades, and a ban on price increases by retailers. Belarusian authorities have threatened to force managers of appliance manufacturers out of their jobs if they do not increase production in an attempt to keep prices fixed despite the plunging currency.
The Lukashenko administration, which has ruled over Belarus since 1994, appears to have shut down IP addresses of independent news websites and online shops, a draconian move aimed at stopping the spread of news about bank runs and the collapse of the Belarusian ruble. Agence France-Presse quoted a statement by the BelaPAN news agency, which said, “Clearly the decision to block the IP addresses could only be taken by the authorities because in Belarus the government has a monopoly on providing IPs.” The Belarusian government also urged banks to stop offering loans until February and raised 1-year interest rates on bank liquidity operations to 50%. Exporters have also been told that they must convert 50% of their foreign income into Belarus’ dying ruble.
Meanwhile, people in Belarus have begun to strip store shelves bare in an effort to ditch their rubles before the currency, which lost 50% of its value at the beginning of the year, slips further. A Belarusian shopper, quoted by ZeroHedge, said, “We have to do something with these Belarusian rubles.”
The news website Belarus Partisan criticized the Belarusian government’s currency controls and crackdown on media outlets, saying, in a statement quoted by Agence France-Presse, “Looks like the authorities want to turn light panic over the fall of the Belarusian ruble into a real one.”