emg home
Tadic: I am confident that better days are coming Serbia-Montenegro: Joint police teams to combat organized crime Hostage situation at Komotini factory; two women released No damage in Santorini ecosystem detected from Sea Diamond wreckage Macedonia presented as camping destination at Essen fair French Cultural Center rebrands into French Institute Italy's credit line for small, medium enterprises Serbia exports raspberries to EU NBS: Inflation drop in Serbia continues There are new details about death of Trajkovski Govt to sell 50.000 tons of corn from reserves Greek debt swap does not trigger CDS payments: ISDA PM Gruevski meets Greek counterpart Papademos in Brussels Kosovo: Important step in relations with the EU Foreign affairs committee wants fresh dynamic in EU-Turkey relations RS boycotts celebration of BiH Independence Day Ashton: Get entire region closer to EU Serbia to lose agreement with Russia because of EU Fuele: Pristina should work on agenda for north South Serbia Albanians insist on '92 referendum Serbian EU integration Council to hold session Serbia, France to sign agriculture agreement Dacic to open meeting of MARRI friends Conference “Crisis in movie industry in South East Europe“ to be held UNMIK to withdraw from regional meetings Josipovic calls for border dispute talks before arbitration Serbia becomes EU candidate Tadic: Door to prosperity opens

No reason to panic over dinar weakening

01. March 2012. | 07:48

Source: Tanjug

Governor of the National Bank of Serbia (NBS) Dejan Soskic said Wednesday that there was no reason for "any kind of panic" over the weakening of the value of the Srbian dinar.

Governor of the National Bank of Serbia (NBS) Dejan Soskic said Wednesday that there was no reason for "any kind of panic" over the weakening of the value of the Srbian dinar.

“The NBS has instruments it can intervene with,” Soskic said in an interview with Tanjug, adding that the country's “foreign currency reserves are at a very satisfactory level, they are sufficient to ensure financial stability.”

He said that the weakening of the domestic currency was “relatively modest” - 4.3 percent in the first two months of 2012, adding that “the speed and dynamics of the exchange rate changes are not unusual for the currency regime of the dinar.”

We should not forget that the dinar was very stable for a long time, “since November 2010, when the exchange rate was at about 107 dinars to the euro, until now, when the rate is at 110 dinars per euro,” said Soskic, adding that the changes now taking place are not unusual for currencies using the fluctuating exchange rate regime.

Speaking about the causes of dinar's weakening, Soskic pointed out that they were always related to investors' expectations
and that the investors probably estimated that the dinar was set for downturn.

“We have certain other developments as well - suspension of our relationship with the International Monetary Fund - a level of reserves with international investors that appeared as a consequence of that, which is something that the NBS had been warning could happen."

“All this has created a set of market circumstances that we are now facing, (but) we believe that there is no reason for concern, we follow the market developments closely and we are ready to use the quite significant and effective tools that we have within our jurisdiction,” said Soskic.

As for interventions in the foreign exchange market, the NBS governor said that the NBS would continue making interventions to reduce excessive daily fluctuations whenever it saw excessive nervousness and instability in the market, but not by going against the market trends because these should be determined by the offer and demand and it was entirely consistent with the exchange rate regime and inflation targeting.

“The NBS will continue pursuing its current policy when it comes to inflation targeting, but not when it comes to targeting the exchange rate, and it will also use foreign exchange reserves in terms of control of inflationary pressures that may endanger the financial stability of the country, in this way preventing the financial stability from falling in danger," he said.

Commenting on the opinions of some experts who said that Serbia should introduce a fixed exchange rate, Soskic pointed out that the fluent exchange rate had been chosen intentionally, since it, as a rule, reduced the potential cost that a country had to pay when affected by external instability.


My Web

Enter text:


27. February - 04. March 2012.