Currency Devaluation in Belarus Causes a Run on Toilet Paper - Truth is Treason: "The destruction of a currency is, without doubt, positively devastating for a society. History is generous with examples dating all the way back to 212 BC when Rome first devalued its denarius silver coin by 50%. Recent examples are also plentiful.
Zimbabwe’s hyperinflationary period is well documented; what most people don’t realize is that after inflating several trillion percent, the government simply discontinued the currency… literally devaluing the Zimbabwe dollar to zero. People holding Zimbabwe dollars lost their entire savings overnight.
Argentina’s devaluation in 2002 sent its peso from 1:1 vs. to roughly 4 pesos to the dollar. Banks closed, taking depositors’ savings with them. Those with any cash savings were paying four times as much for goods, practically overnight. Unemployment soared. Even now, over ten years later, the economy has yet to fully recover.
Belarus is the latest example. This is a country where the autocratic president Alexandr Lukashenko controls 80% of the economy through state-owned entities. He rules in the old Soviet style with KGB and secret police, demanding total servitude from his people.
Earlier this week, Lukashenko ordered his central bank to devalue the Belarusian ruble by 56%, immediately. The ruble’s official exchange rate is now 4,930 per US dollar and 6,914 per euro.
Unfortunately, dollars and euros are extremely hard to come by in Belarus… so the lack of supply and strong demand is pushing up street prices to several times the official rate.
News headlines picked up on this major leap; what you won’t see in the media is that local Belarusians knew this was coming… the warning signs were there.
Last month, most banks stopped trading foreign currencies. People rushed to the foreign banks to withdraw any dollars they had on deposit, many having to wait up to 7-days after making the request before the bank could actually provide cash.
While the official devaluation to 4,930 occurred on May 23rd, the banks were running out of foreign currency fast. Several of our local friends on the ground in Minsk confirm that by May 16th, a full week before the official devaluation, banks were charging between 10,000 to 12,000 rubles per dollar.
Grocery prices (in ruble terms) have tripled in this short period as most of the food is imported from companies who require dollar or euro payments. It now costs an entire year’s wages just to buy a simple refrigerator.
Our local contacts report that many store shelves are near empty as people are rushing to spend every ruble they have in anticipation of further rising prices. Some of my local friends have emailed saying that it’s getting difficult to even find toilet paper as people are buying up absolutely everything they can..."