Strong home currency harms exporters

A strong Serbian dinar (RSD) is causing trouble in the high fruit exporting season, reports say.

Izvor: B92

Sunday, 22.06.2008.

12:55

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A strong Serbian dinar (RSD) is causing trouble in the high fruit exporting season, reports say. Serbia sells several million euros worth of sour cherries, raspberries, blackberries and plums each year, but is this year facing competition from Poland, Chile, Argentina, and increasingly China. Strong home currency harms exporters In addition to this, the strengthening of the dinar against the euro has dealt a new blow to exporters, making the prices of Serbian fruit less competitive in the world markets. Companies must also overcome another obstacle: two exchange rates that commercial banks have when buying and selling hard currency. Importers, on the other hand, are happy with the strong dinar, but exporters must sell foreign currency to buy pricy dinars, in order to pay the farmers. All this does not bode well for Serbia's already staggering trade deficit. Although Serbians seem happy to see a strong national currency, which gives them the illusion that they are earning more money, in the long term an unrealistically strong dinar, experts say, can have extremely negative consequences, including a budget deficit in 2008.

Strong home currency harms exporters

In addition to this, the strengthening of the dinar against the euro has dealt a new blow to exporters, making the prices of Serbian fruit less competitive in the world markets.

Companies must also overcome another obstacle: two exchange rates that commercial banks have when buying and selling hard currency.

Importers, on the other hand, are happy with the strong dinar, but exporters must sell foreign currency to buy pricy dinars, in order to pay the farmers.

All this does not bode well for Serbia's already staggering trade deficit.

Although Serbians seem happy to see a strong national currency, which gives them the illusion that they are earning more money, in the long term an unrealistically strong dinar, experts say, can have extremely negative consequences, including a budget deficit in 2008.

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