Serbia's gross foreign exchange reserves decreased 7.3% y/y to EUR 10.8bn at end-February 2014, following a 6.0% annual growth the month before, the central bank (NBS) said in a statement. They covered more than seven months of imports as well the M1 money supply by 351%, the bank said. In monthly terms, the gross FX reserves shrank 2.6% in February after edging down 0.6% m/m in January.

The biggest outflows resulted from the payment of liabilities to the IMF (EUR 100.6mn) and other foreign creditors (EUR 62.5mn).

The largest inflows, on the other hand, came from banks’ allocations under foreign exchange reserves requirements (EUR 54.5mn), the sale of government securities on the domestic market (EUR 49.6mn) and the disbursements of credits and grants worth EUR 31.4mn.

Net FX reserves, defined as FX reserves less banks’ required reserves and IMF drawings, totalled EUR 7,460.0mn in February, down 3.4% m/m. Trading volumes on the interbank foreign exchange market declined by EUR 157.3mn m/m to EUR 411mn in February. This brought the overall market turnover in the first two months of the year to EUR 979.3mn.

In February, the local dinar currency maintained its value against the euro after weakening by a nominal 1.1% m/m in January, the NBS underscored. The central bank sold EUR 280mn on the domestic currency market to mitigate the excessive daily volatility of the exchange rate in February.