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Nov 30, 2007 13:25 EEST
BELGRADE (Serbia), November 30 (SeeNews)- The recent tumble of the weakening Serbian dinar has been halted and the currency has started to gain ground against the euro following a central bank intervention, dealers said on Friday.
The dinar traded at 84.0/84.7 per euro on Friday morning on the interbank market, recovering from its November low of 85 dinars per euro it hit on Thursday. The market is still in a tie-up, as several banks stay on the sidelines and do not take part in trading, a bank dealer told Seenews.
The dinar has weakened against the euro throughout November before Serbia's central bank, NBS, intervened by selling 4.0 million euros ($5.9 million) at a rate of 85 dinars per euro on the interbank foreign exchange market out of 33 million euro it had offered to the market in a bid to bolster the weakening dinar. The dinar traded at around 77 per euro at the beginning of the month.
Several dealers said that the recent fall of the dinar has been more or less a psychological reaction to the uncertainty surrounding the future status of independence-seeking U.N.-run southern Serbian province of Kosovo.
Kosovo has been under U.N. administration since NATO bombs drove out Serb forces amid inter-ethnic fighting in 1999. Serbs oppose any form of independence for the province, while Kosovo's ethnic Albanian majority insists on it. Final face-to-face talks between Kosovo Serbs and ethnic Albanians ended on Wednesday without any compromise on the future status of province. The envoys, from the EU, U.S. and Russia, said in a statement that they will work out a report on the future status of Kosovo and present it to the United Nations on December 10 after discussing the draft with Belgrade and Pristina officials on December 3 during a visit to the region.
"The central bank intervention showed that the NSB is ready to safeguard the dinar, but I do not think there is a real threat for it," a local bank dealer told SeeNews.
The dinar should start firming again, especially ahead of Christmas, when a lot of remittances from abroad are expected to come to Serbia. Besides, a lot of Serbs living abroad will come to spend the holidays in Serbia which should certainly lead to a rise in foreign currency inflow, he said.
"I expect more central bank interventions to come and the market to calm down," Erste Bank analyst Mladen Dodig told SeeNews.
Dodig said he expects the inflow of foreign currency to the Serbian market to increase as a result of the expected sale of Serbia's second-biggest insurer DDOR to Italy's Fondiaria and a capital increase of National Bank of Greece's Serbian unit.
($ = 0.6765 euro)
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