Annual inflation in Belarus, as measured by changes in consumer price inflation, or CPI, has been very high during the 1990s. It stood at 294 percent by the end of 1999. There were several reasons behind the inflationary pressure on the economy. The 1998 Russian monetary crisis had a negative effect on the Belarusian ruble due to the dependence of the Belarusian economy on Russia. Government subsidies to several sectors of the economy (such as agriculture and housing) supported bad lending practices, poor weather conditions caused low agricultural production, and the government's periodic expansion of the money supply caused a devaluation of the Belarusian ruble.
In February 1993 Belarus set up the Inter-Bank Currency Exchange which is the main trading forum of the legal currency market. Trades are performed in 4 main currencies: the U.S. dollar, the German mark, the Russian ruble, and the Ukrainian grivna. The Russian financial crisis of 1998 forced the Belarusian ruble to depreciate against the Russian ruble and the U.S. dollar. In April 2000 the exchange rate stood at BR435 to US$1. The depreciation of the Belarusian currency continued to accelerate in the following months, reaching a whopping BR1,247 to US$1 by mid-February 2001.
|Exchange rates: Belarus|
|Belarusian rubles per US$1|
|Note: On January 1, 2000, the national currency was redenominated at onenew ruble to 2,000 old rubles.|
|SOURCE: CIA World Factbook 2001 [ONLINE].|
|GDP per Capita (US$)|
|SOURCE: United Nations. Human Development Report 2000; Trends in human development and per capita income.|