December 18, 2014 / 9:40 AM / 4 years ago

UPDATE 2-Belarus's Lukashenko demands that trade with Russia be in dollars, euros

* Belarus is close ally of Russia and main trading partner

* Lukashenko says Belarus will not devalue its own rouble (Adds detail on Russian-Belarussian trade)

By Andrei Makhovsky

MINSK, Dec 18 (Reuters) - Belarussian President Alexander Lukashenko has demanded that Belarus’s transactions with Russia be settled in dollars or euros because of the slump in the value of Russia’s rouble, the official news agency Belta reported on Thursday.

The Russian rouble suffered its largest intraday loss since 1998 on Tuesday and its weakness poses a threat to the economy of Belarus, a close ally whose main trading partner is Russia.

Over half of Belarus’s exports go to Russia, mainly trucks, tractors and industrial machinery, and around 92 percent of transactions are currently carried out in roubles.

“We’re going to trade not in roubles, but in dollars,” Belta quoted Lukashenko as saying. “We should have long ago demanded Russia pay us also in hard currency.”

Belarus earned $739 million less on exports year-on-year in January-October even though volumes remained the same, according to official statistics.

The plunge in Russia’s currency combined with low oil prices, looming recession and Western sanctions over the Ukraine conflict has left the Kremlin facing a financial crisis.

Belarus’s eccentric leader, who has occasionally made remarks critical of Russian policy despite the economies of the two countries being closely intertwined, expressed concern about the turmoil on the Russian market.

“We’re not going to run after Russia. This is categorically forbidden because it is not clear what’s happening on the Russian market,” he said.

He said Belarus would not devalue its own currency over the weakness of the Russian rouble. The Belarussian rouble has strengthened to 163 to the Russian rouble from 290 at the beginning of 2014. (Reporting by Andrei Makhovsky; Writing by Alessandra Prentice; Editing by Richard Balmforth)

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