* Rouble down by a third against the dollar
* Setback for Lukashenko on eve of state-of-nation speech
(Adds analyst on where exchange rate likely to settle)
By Andrei Makhovsky
MINSK, April 20 The Belarussian rouble BYR=
lost more than a third of its value against the dollar on
Wednesday after the central bank introduced a free floating
exchange rate for trade between banks.
The development starkly highlighted the currency problems of
the ex-Soviet republic and amounted to a setback for President
Alexander Lukashenko who was due on Thursday to deliver his
annual state of the nation speech.
Coming nine days after a bomb blast at a Minsk metro station
that killed 13 people, the rouble's fall against the dollar
piled on the misery for the average Belarussian citizen who was
promised better times ahead when Lukashenko was re-elected for a
fourth term last December.
Bankers said the rouble on Wednesday plunged in value to
4,800 to 5,300 per dollar in trading on the interbank market.
This compared with the official exchange rate of 3,074 roubles
Dealers said demand for dollars on the market had surged
after Belarus dropped restrictions on the rate used by banks and
companies on Tuesday, opening the door to a partial devaluation
of the currency.
"There is a lot of delayed demand (for dollars)," one trader
He warned that the one-off surge, which reflects the fact
that many players had not been able to buy dollars for weeks,
may ease off, pointing to the rouble recovering some ground.
While ordinary citizens in theory can exchange roubles at
the official rate, the reality is that supply of dollars from
official exchange points has dried up, forcing ordinary people
to buy roubles on the street at black market rates.
The other implication is that prices of imported goods will
probably continue to rise -- prices for goods ranging from food
to computers are up more than 20 percent since the start of
Belarus has lost a quarter of its foreign currency reserves
this year, trying to support the rouble as its current account
deficit soared, partly under the impact of high pre-election
spending late last year.
In past weeks, as the supply of dollars has run out,
Belarussians have been queuing for hours at exchange points to
acquire whatever foreign currency was available.
If the rouble stays down at around 5,000 to the dollar, the
flow of dollars to these retail outlets is liable to dry up
completely since they are only allowed to operate at around the
Exporters, too, still have to sell 30 percent of their
foreign currency revenue to the central bank at the official
rate. The central bank can then resell it to banks or companies
it picks, also at an artificially low rate.
Lukashenko, who is at odds with the West over a police
crackdown on the opposition following his disputed re-election
last December, promised to bring the average monthly wage to 500
dollars in 2010 and double it by 2015.
But this will be almost impossible to achieve if the rouble
continues to depreciate.
The central bank and government have said that they expect
gradually to unify the market in one exchange rate once it
settles down from the initial moves. Foreign analysts' estimates
for how much the rouble needs to fall in fundamental terms were
around 20-30 percent, less than Wednesday's slump.
"I think the fair exchange rate will be around 4,000-4,300
if the central bank gets the Russian loans -- which I think is a
matter of one week -- and if exporters stop withholding foreign
currency," said Anastasia Golovach of Renassance Capital.
In Thursday's state of the nation speech, Lukashenko seems
likely to blame rising energy prices for the current economic
problems and opposition forces whom he regularly accuses of
sowing panic among the population.
Lukashenko blamed the April 11 metro bombing on forces which
he said were intent on destabilising the country. After
announcing the arrest of the main suspects, he said opposition
leaders should also be questioned over the bombing.
(Reporting by Andrei Makhovsky; Writing by Richard Balmforth
and Olzhas Auyezov)