Serbian Dinar Continues To Weaken

07 November 2008 Belgrade – The Serbian dinar continued its slide against the euro after a brief respite earlier this month.

The Belgrade-based National Bank of Serbia said the dinar’s exchange rate with the euro stood at 86.7984 on Friday, setting a record low for 2008, down from its high in June of 75.7543 per Euro.

This week the central bank intervened with a total of 50 million euros to restore liquidity in the currency market.

On Thursday alone, the bank injected 20 million euros into the market after the dinar plummeted to 86.7145 with and looked set to fall further.

“The intervention was aimed at preventing major oscillations of the exchange rate, having in mind the low volume of trading,” the bank said in a statement.

In a separate statement carried by the B92 TV, Jelasic said that “the exchange rate is a mirror image of the Serbian economy.”

Since the beginning of October, the Serbian central bank injected 260 million euros to stabilise the dinar’s value.

Jelasic said he hopes that the precautionary agreement between Serbia and the International Monetary Fund “that will be adopted this weekend will contribute to the stabilisation of the exchange rate.”

The precautionary agreement is a non-financial deal in which the IMF states its support for a country’s macroeconomic policies.

The IMF delegation is currently in Belgrade where it is working with the Serbian government on drafting the 2009 budget.

Earlier this week, the IMF delegation said that Serbia’s 2009 budget will have a deficit of as many as 50 billion dinars (560 million euros) and that growth will be slashed by half from the present rate of 7 percent.