Serbian Dinars Weakens on Increased Demand for Euro

The dinar traded at 83.70 per euro around midday on Friday, weaker than 83.45-55 at Thursday’s close, a local dealer told SeeNews.

“There has been some weakening trend in the last days. The market is quite volatile to some contractions in euro, both here and abroad, which increases the demand,” the dealer said.

“But the volatility is not at a level when the central bank intervenes particularly strongly,” the dealer added.

“The exchange rate is falling smoothly. In very rare occasions the movement is marked by big jumps."

The dinar has lost 2.5% of its value against the euro in the last two days after a three-day strengthening a total of 2.3%, local broadcaster B92 reported on Friday.

The dinar strengthened earlier this week on the back of last week’s changes in the central bank’s reserves requirement aimed at boosting demand for dinars. The bank scrapped its mandatory reserves requirement for banks' fresh borrowing in foreign currency, retroactive from October 1, aiming to boost the liquidity of the country's banking system amid the global financial crisis.

“The bank has not intervened so far [on Friday] but we can’t presume what they will do,” the dealer said.