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Belarus demand for FX spikes amid devaluation fear

MINSK, Nov 12 (Reuters) - Net demand for foreign currencies from Belarus households jumped almost fivefold in October, central bank data showed on Friday, as the country's president denied a devaluation of the local rouble was imminent. According to central bank data, Belarus households bought $917 million and sold $600 million in October, taking net demand to $317 million. Earlier this year, monthly average net demand for dollars and euros stood at around $30-40 million. Belarus took markets by surprise in early 2009 when it devalued its rouble by 20 percent after the government said no devaluation was planned. The currency has weakened around 4 percent since the start of this year. One banker, who asked not to be named, said the increased demand for foreign currencies might be linked to fears the same could happen again. "The word 'panic' would be to strong but some wariness, some negative expectations are in place," the banker said. Belarus' long-serving leader Alexander Lukashenko said on Friday no devaluation was planned. "This issue was raised by phonies... They just need to stir people ahead of elections," local agencies cited Lukashenko as saying. "You can stage the devaluation yourself if you continue buying foreign currencies." The 55-year-old Lukashenko, who has been in power since 1994, is seeking re-election on December 19 and has pledged to raise salaries by a third in contravention of a $3.5 billion aid agreement with the International Monetary Fund (IMF). The IMF has said such a hike would have no economic rationale and would double Belarus' 2010 budget deficit. "When such a rapid increase in salaries is taking place, people understand that money won't emerge from the air... What is going on now is just an attempt to protect from devaluation," said Sergei Chaliy, an independent finance analyst. (Reporting by Andrey Makhovsky; Writing by Andrey Ostroukh; Editing by John Stonestreet) Keywords: BELARUS CURRENCY/ (andrey.ostroukh@reuters.com, +7 495 775 12 42) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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