Serb central bank buys EUR 10mn as dinar continues to gain ground

By bne IntelliNews May 8, 2013

The Serbian central bank, NBS, bought EUR 10mn on the interbank foreign exchange market on Tuesday, May 7, in order to calm down the excessive daily oscillations in the dinar-euro exchange rate, it said in a brief note on its website.

The intervention comes after NBS bought EUR 20mn in two consecutive days in the last week of April when the dinar gained ground after the European Commission said Serbia should receive a date for starting accession talks. The dinar has reached a record high level in 13 months, becoming one of Europe’s best performing currency. It has gained 2.8% against the euro so far this year.

Local forex dealers quoted by Bloomberg said that the latest intervention was made at 110.4-110.6 dinars per euro after the domestic currency gained 0.3% on the day. Bloomberg calculates that NBS has bought EUR 90mn worth of euro in six interventions so far this year, including the May 7 purchase.

NBS data show that the dinar-euro official exchange rate on Wednesday, May 8, is 110.666 – unchanged on the day, 1.2% higher y/y and up 1% m/m.

Serbia’s EU prospects received a boost on April 22 when the Commission issued its recommendation that the country’s integration process should be unblocked as quickly as possible after Belgrade and Pristina reached an agreement on how to solve their relations. Serbia is expected to receive a date for starting EU accession talks by June as a result of its agreement with Kosovo.

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