Wednesday, October 19, 2011

Today's Major Market Move: Belarusian Ruble Weakens 11.2% Against the USD this Month

If you want to follow a real live hyperinflationary scenario unfolding before your eyes, look no further than the Belarusian Ruble. Its down another 11.2% vs the USD this month which brings the total decline for the year to 185%. Seeing as how the exchange rate for pictures to words has and will always be .001, let me add some graphical flavor to this post:

Click on the image for a larger view.
Click here for a live version of the chart.

The chart shows 3 steps representing 3 major devaluation events. The first event on May 31 was delivered by edict from the Belarusian authorities (which we discussed here). The other two events were driven by the market meaning that the authorities have essentially lost control of the currency. I would not be surprised if we see at some not-too-distant point in the future a several-thousands to 1 type of currency conversion. I also suspect that a significant portion of cash transactions in Belarus are now being conducted in a foreign currency, most likely Euros or US Dollars.

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