The National Bank of Serbia (NBS) bought EUR 40 million on the inter-bank foreign exchange market over the past 20 days, in keeping with the previously issued announcement, the central bank released on Tuesday.

On May 19, the NBS started purchasing euro on the inter-bank foreign exchange market so as to ease excessive daily volatility of the exchange rate, after NBS Vice-Governor Bojan Markovic announced that the NBS intends to buy a total of EUR 40 million on the foreign exchange market.

Presenting the May report on inflation on May 18, Markovic said that the central bank wishes to make up for a smaller portion of the EUR 2. 3 billion it sold on the foreign exchange market in 2010 in order to prevent excessive drop of the dinar and ensure market liquidity.

Markovic hinted that NBS interventions would not be 'massive' and that the central bank would buy approximately EUR 2 million daily, and indicated that the NBS would not conduct either the policy of dinar appreciation nor that of dinar depreciation because the exchange rate is formed freely on the market, on the basis of the proportion between supply and demand.

On Tuesday, dinar dropped by 0.73 per cent, thus setting the official middle exchange rate at RSD 98.7951, which is 72 paras higher than on Monday, when the exchange rate totalled RSD 98.0782.