Serbia's foreign exchange market turnover increased 5.6% y/y to EUR 6.1bn in January 2014, improving from a 3.9% annual growth in December 2013, thanks to higher central bank (NBS) interventions and transactions between banks and non-residents, NBS data showed.

The volume accounted for around 17.7% of the full-year GDP forecast, according to IntelliNews calculations.

The value of transactions between banks and non-residents grew 22.3% y/y to EUR 3.5bn in January. It accounted for 58% of the total FX market turnover.

The transactions of NBS on the interbank forex market rose to EUR 330mn in January from just EUR 5mn a year earlier due to higher NBS interventions. Since the start of 2014 until March 13, NBS sold over EUR 800mn on the domestic interbank market to prop up the local dinar currency.

The dinar started weakening against the euro in early 2014 due to both external (US Fed monetary stimulus tapering) and internal factors (political uncertainties ahead of the March 16 early parliamentary elections). The dinar traded at RSD 115.96 for one euro on March 13, 1.2% weaker against the euro as compared to the end-2013.

The value of interbank transactions plunged 50.8% y/y to EUR 568.3mn in January, accounting for 9.4% of the total market turnover over the period.

The volume of the regular FX swap transactions carried out by NBS fell to EUR 18mn from EUR 26mn a year earlier.

Serbia's foreign exchange market turnover fell 12.5% y/y to EUR 66.7bn in 2013, deteriorating from a 5.8% decline in 2012, mainly due to falling interbank transactions, the central bank data showed.