UPDATE 1 - Serbia’s C-bank Intervenes After Dinar Hits 2008 Record Low - Dealers

The central bank said in a statement it sold 26 million euro ($32.4 million) on Monday to slow the dinar's fall.

The dinar reached 86.00 dinars per euro earlier on Monday, its lowest level since the beginning of the year, after closing at 84.30-84.50 per euro on Friday.

“It started to sharply weaken straight after the opening today,” a local dealer told SeeNews. “A lot of clients started buying today. There were big clients, who bought large amounts [of euro], that is the reason why the dinar weakened.”

The dinar strengthened to 84.00 per euro after the intervention in the morning but weakened back to around 85.00 at 1100 GMT.

“The rate is very volatile today. It moves between 83.90 and 85.00,” a second dealer said. “Banks quote very wide spreads and we can’t define exactly the price. The rate is moving up or down very fast.”

The last time this year the dinar traded weaker was at 83.86 per euro on May 12, a day after Serbia’s snap elections failed to give President Boris Tadic's pro-Western coalition enough seats to form a cabinet on its own. After prolonged negotiations, a pro-European coalition cabinet finally took office at the beginning of July.

The dinar started firming in June, when many banks increased their capital, market analysts have said, but the recent deepening of the global financial crisis has dented confidence in the dinar, making investors seek a safe haven in foreign currencies.

($ = 0.8028 euro)