BELGRADE (Serbia), December 4 (SeeNews) – The battered Serbian dinar regained nearly 3.0% on Thursday afternoon after the central bank said it will double to 40% the share of mandatory reserves on foreign currency deposits that commercial banks have to maintain in dinars, dealers said.
“Today the dinar/euro rate was at [historic low of] 92.20 at one point. Then the central bank announced its new measures [...] and this was enough for the dinar to firm to 89.50-90.00 per euro by 2.20 p.m. [1320 GMT],” a local dealer told SeeNews.
Central bank governor Radovan Jelasic told a news conference on Thursday morning NBS monetary committee will discuss the mandatory reserves increase and other measures aimed at stabilizing the market by Monday at the latest.
This will be the second increase in the share of dinar-denominated mandatory reserves after the Serbian central bank, NBS, raised it to 20% from 10% in October in a bid to spur demand for dinars.
With the dinar having lost around 10% of its value against the euro in the past month only, which was the biggest monthly drop when compared to the currencies of neighbouring emerging markets, NBS has been intervening daily to slow the fall in the Serbian currency.
NBS sold 60 million euro ($76 million) on Wednesday alone, and 10 million euro in each of the sessions on Monday and Tuesday.
“The intervention today was made in a different way. The central bank did not sell outright but held an interbank session, where each bank individually announced to NBS what it wants to buy and sell and at what rate,” the dealer said. ‘So then, after the session NBS said – ok, we did this and this and told every bank individually whether its bid has gone through or not.”
Jelasic said at the news conference that NBS will in case of need organise such interbank sessions. Based on the information supplied by the banks NBS will decide which of the buy and sell orders it will take in order to smooth excessive ups or downs in the exchange rate.
The NBS monetary committee will also take measures to ensure that the excess foreign exchange liquidity of Serbian banks remains in the country, said Jelasic. It will also lower the ceiling for banks' net open positions to 10% from the current 20% to reduce the foreign currency risk for banks.
Another dealer told SeeNews earlier the dinar firmed thanks to the set of supportive measures announced by Jelasic to 90.50 per euro by 1120 GMT on Thursday after weakening to 92.00 per euro earlier in the day. He said the dinar closed at 91.70 per euro on Wednesday.
