Euro edging towards RSD 85 mark

The dinar has fallen for the fifth consecutive day, dropping to RSD 84.99 to the euro.

Izvor: B92

Friday, 31.10.2008.

11:09

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The dinar has fallen for the fifth consecutive day, dropping to RSD 84.99 to the euro. Despite another National Bank (NBS) intervention to stabilize the exchange rate, the lack of foreign currency on the Serbian market is relentlessly driving down the dinar’s value. Euro edging towards RSD 85 mark Goran Nikolic from the Chamber of Commerce says that the banks are playing safe as they do not want to be exposed to excessive foreign currency risk. “The main reason for the lack of foreign capital is that the European credit market that supplied capital is virtually frozen. That money, those euros, appeared on the inter-bank currency market as a supply of foreign currency that kept the dinar stable,“ said Nikolic. “However, at this moment in time, in the last month and a half, since the start of the global crisis, the influx of that kind of capital has fallen sharply, as has direct foreign investment, meaning that we have a very low influx of capital right now. Luckily, the NBS is pursuing a strict monetary policy, so that there is not a big supply of dinars either,“ he explains. Nikolic says that stabilization of the dinar hinges on one factor above all. “That will primarily depend on goings-on on the European credit market. So, if we see any encouraging signs on the European foreign currency market in terms of calming the share indexes, of them rallying a bit after reductions in interest rates and anticipated further reductions by the European Central Bank. So, if the European credit market revives, we can expect an influx of capital into Serbia via loans and European banks,“ he says. Nikolic adds that customers whose loans are tied to the euro have no cause for concern as loans have got cheaper with the fall of the dinar. B92

Euro edging towards RSD 85 mark

Goran Nikolić from the Chamber of Commerce says that the banks are playing safe as they do not want to be exposed to excessive foreign currency risk.

“The main reason for the lack of foreign capital is that the European credit market that supplied capital is virtually frozen. That money, those euros, appeared on the inter-bank currency market as a supply of foreign currency that kept the dinar stable,“ said Nikolić.

“However, at this moment in time, in the last month and a half, since the start of the global crisis, the influx of that kind of capital has fallen sharply, as has direct foreign investment, meaning that we have a very low influx of capital right now. Luckily, the NBS is pursuing a strict monetary policy, so that there is not a big supply of dinars either,“ he explains.

Nikolić says that stabilization of the dinar hinges on one factor above all.

“That will primarily depend on goings-on on the European credit market. So, if we see any encouraging signs on the European foreign currency market in terms of calming the share indexes, of them rallying a bit after reductions in interest rates and anticipated further reductions by the European Central Bank. So, if the European credit market revives, we can expect an influx of capital into Serbia via loans and European banks,“ he says.

Nikolić adds that customers whose loans are tied to the euro have no cause for concern as loans have got cheaper with the fall of the dinar.

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