Serbian C-bank Sells Euro as Dinar Starts Weakening – Dealers

“The central bank intervened at 85.00 dinars per euro, selling some 12 million euro ($15 million) as there was big demand,” a local dealer told SeeNews, quoting an exchange rate  of 85.20-86.20 dinars per euro after the intervention at 1340 GMT versus 84.50–85.50 at Tuesday's close.

“The dinar started losing ground yesterday after it reached 82.00 and some banks started buying probably considering it a low enough mark,” another dealer said, quoting a dinar/euro rate of 86.00 at 1400 GMT versus 84.50 in the last trade on Tuesday.

On Thursday NBS said it would double to 40% the share of mandatory reserves on foreign currency deposits that commercial banks must maintain in dinars - a move aimed at lending support to the dinar that has been losing ground since the summer. The announcement resulted in sharp appreciation of the dinar after months of heavy losses and since than the central bank has been buying euro from the market to slow the dinar's advance.

Prior to the NBS announcement on the new mandatory reserves regulation, the dinar had lost around 10% of its value against the euro in November, the biggest monthly drop compared to the currencies of neighbouring emerging markets.

 ($ = 0.7713 euro)