* Belarus reverses partial rouble free float after 3 days
* Gap between parallel rouble rates had widened
* Expects $3 billion Russian loan in May
* May start selling off state assets
(Adds details, background)
By Andrei Makhovsky
MINSK, April 22 Belarus' currency crisis
deepened on Friday as interbank foreign exchange trading ground
to a halt, participants said, following a policy U-turn on
valuations from the central bank.
The bank, battling to restore confidence in the country's
depreciating rouble, said on Tuesday it would allow the currency
to float on the interbank market, taking a step towards a
But after the currency immediately fell to 5,000 per dollar
in trading, the central bank on Friday informally recommended
that banks transact at a valuation closer to the official rate
"The central bank has strongly recommended banks to work
within the 4,500-4,600 corridor," one source said.
"There is no trading," said another.
The central bank, which operates separate exchange rates for
banks and corporations on the one hand and individuals on the
other, declined to comment on Friday's interbank trading.
The move effectively reversed Tuesday's decision to allow a
free-floating rate on the interbank market.
"The central bank must have been terrified that the rate had
become uncontrollable," said one market player who spoke on
condition of anonymity.
Facing a large current account deficit, Belarus has lost a
quarter of its foreign currency reserves this year trying to
support the rouble before resorting to trading restrictions in
Belarussian exporters must sell 30 percent of their export
revenue to the central bank at the official rate which also
serves as an indicator for high-street cash points.
But since the official rate is unattractive, many businesses
are holding on to their currency reserves and turning off the
flow of dollars into the retail points.
The currency crisis and the operation of a two-tier exchange
rate system which has spawned a currency black market and led to
panic buying of consumer goods, represent a setback for
President Alexander Lukashenko.
He promised a steady improvement in living standards prior
to his re-election last December.
Some Belarussians are now posting themselves money transfers
to Russia, then driving across the border to pick them up in
Russian roubles and sell them at a profit back home on the black
Ordinary Belarussians are having to wait for hours in lines
to cash points to snap up whatever currency is sold by others.
"Scuffles are taking place at exchange points ... as
citizens argue about queue order," Interfax news agency quoted
senior Interior Ministry official Viktor Senko as saying.
AWAITING RUSSIAN AID
The central bank has said it will unify rates and do away
with different tiers once the free-floating exchange rate
becomes "balanced". Deputy Prime Minister Sergei Rumas told
Reuters this week he saw 3,800-4,100 roubles per dollar as a
fair exchange rate.
Analysts say the authorities are waiting for a $3 billion
loan that Belarus has requested from Russia and which will allow
the central bank to regain control of the market.
"We are expecting some foreign borrowing and talks with
Russia, in particular, are going on," Anatoly Moroz, the head of
currency control department at the central bank was quoted by
state news agency BelTA as saying on Friday.
"In May, this issue (of a loan) will be resolved," he said.
Russia, however, has said it wants to see a more detailed
economic stabilisation plan. Analysts say another option for
Belarus is to sell some state assets.
"We also expect to see news about a possible privatisation
of state assets intensifying in coming weeks as this remains one
of the few real options for refilling the reserves that the
authorities have at their disposal," VTB Capital said in a note.
A devaluation would be a setback for Lukashenko who promised
to double the average monthly wage to $1,000 by 2015 as he
campaigned for a fourth term in office last year.
(Reporting by Andrei Makhovsky; Writing by Olzhas Auyezov
and Richard Balmforth; Editing by John Stonestreet)