Serbian Dinar Closes Tad Weaker, C-bank Refrains from Intervention

NBS did not intervene as it believes the Serbian foreign exchange market is stabilising and the dinar exchange rate is formed as a result of direct trading among commercial banks with no excessive daily oscillations, it said in a statement. The central bank quoted a reference exchange rate of 81.9423 dinars per euro for Tuesday based on morning trade.

The dinar traded at 82.10-82.15 per euro shortly before the market closed, a local dealer told SeeNews.

On Monday the central bank stepped in on the market, selling 60 million euro ($82.5 million) to prevent an excessive drop of the dinar. It quoted the dinar at 81.26 per euro at close. The bank’s average daily exchange rate for Friday was 79.9850 dinars per euro.

“The problem is the chronic lack of foreign currency as depositors are closing their accounts in large numbers, fearing for their savings amid the negative global sentiment and also due to bad experience in the past,” another dealer said earlier.

He added that the big demand for foreign currency was due to lack of confidence and the market could not cope with the outflow of foreign currency.

“Some 500-600 million euro in savings were withdrawn last week alone. In the past four years we have had a savings growth rate of some 20-30% a year, while now we had a drop of 10% in less than 10 days,” the second dealer said.

NBS said last week the country’s banks are safe and sound as the deposits of households have a 28% share in the banking sector's total liabilities, while the funds the banks hold with the central bank account for 34% of the total.

The banks are waiting to see how the global crunch plays out, only servicing existing deals but refraining from new transactions, the dealer said.

($=0.7338 euro)