OREANDA-NEWS. Belarus is likely to react to the events on Russia's financial market by accelerating the devaluation of the domestic currency, reckons Dmitri Kruk of the Research Centre of the Institute for Privatization and Management (IPM).

“The trend of the last two month is the strengthening of the Belarusian ruble against the Russian ruble,” Mr Kruk told. “This aggravates the terms of price competition of Belarusian commodities on the Russian market. Things go even worse in the context of the falling demand on the Russian market and the decline in economic growth. Back in 2008 we also tried to keep up a certain balance against the US dollar, when the Russian ruble was falling. Back then we lost some of our exports and had to significantly adjust the exchange rate on January 1, 2009,” Kruk said.

The events on Belarus' financial market may follow several scenarios. One of the likely scenarios is the National Bank following its slow devaluation strategy, with the Belarusian ruble falling by Br100-200 per month, the expert said.

However, the situation is growing more complicated: in February the country's reserves reduced significantly, which makes it hard for the NBB to sustain its policy. Belarus' central bank will either have to quickly get hold of new credit resources, or to speed up the fall of the Belarusian ruble against the Russian ruble, the expert said.

Another scenario is to impose restrictions on internal demand and quick devaluation - something the NBB promised to prevent. However, if the unavoidable cannot be avoided, the Belarusian ruble will continue losing its value but at much higher speed than now, Mr Kruk said.

The expert believes the Belarusian market will not demonstrate a quick reaction to the latest events on the Russian stock market, which were caused mostly by political reasons.

If capital flight continues in Russia, Belarus will have to sell some its core enterprises to investors in order to mitigate the consequences.