Dinar slides despite intervention

The dinar continues to drift, having lost RSD 1.5 of its value to the euro in the space of two days. The dinar has fallen today by 0.63 percent, with the middle exchange rate sitting at RSD 85.84. Dinar slides despite intervention The National Bank of Serbia (NBS) announced that it had sold EUR 30mn on the inter-bank market to facilitate the market’s smooth functioning, and to help reduce the gap between the buying and selling rates which banks operate according to. NBS Governor Radovan Jelasic said that the institution would continue to intervene on the inter-bank currency markets whenever necessary. However, much more was required to guarantee long-term currency stability, he warned. “I sincerely hope that on the basis of the arrangement with the IMF that would undoubtedly significantly boost confidence in our country’s industry and economy, we will manage to reverse that trend,” said Jelasic. The NBS governor said that it was hard to predict how much inflation would be by the end of the year. He stated that the Central Bank would announce the figure in late November, reiterating that recent projections had suggested that inflation would be in single figures, but that the situation had changed. “It’s a big problem and it’s hard to predict inflation when in the most challenging periods, you’re getting increased gas, and then phone, bills. It’s a big challenge for us, because you’re aiming for one inflation rate, while the political course is heading for another,” he explained. IMF representatives called on the Serbian government to desist from the planned 10 percent pensions increase, as otherwise it risked increasing budget expenditure by over EUR 583mn. Beta understands from the government that the IMF believes that if this proposal is rejected, all salaries in the public sector would have to be frozen from January 1, 2009. However, if the government accepts the proposal, both pensions and public sector salaries could rise next year in line with living costs. An answer is expected by Friday. Radovan Jelasic (FoNet, archive)

Dinar slides despite intervention

The National Bank of Serbia (NBS) announced that it had sold EUR 30mn on the inter-bank market to facilitate the market’s smooth functioning, and to help reduce the gap between the buying and selling rates which banks operate according to.

NBS Governor Radovan Jelašić said that the institution would continue to intervene on the inter-bank currency markets whenever necessary. However, much more was required to guarantee long-term currency stability, he warned.

“I sincerely hope that on the basis of the arrangement with the IMF that would undoubtedly significantly boost confidence in our country’s industry and economy, we will manage to reverse that trend,” said Jelašić.

The NBS governor said that it was hard to predict how much inflation would be by the end of the year. He stated that the Central Bank would announce the figure in late November, reiterating that recent projections had suggested that inflation would be in single figures, but that the situation had changed.

“It’s a big problem and it’s hard to predict inflation when in the most challenging periods, you’re getting increased gas, and then phone, bills. It’s a big challenge for us, because you’re aiming for one inflation rate, while the political course is heading for another,” he explained.

IMF representatives called on the Serbian government to desist from the planned 10 percent pensions increase, as otherwise it risked increasing budget expenditure by over EUR 583mn.

Beta understands from the government that the IMF believes that if this proposal is rejected, all salaries in the public sector would have to be frozen from January 1, 2009. However, if the government accepts the proposal, both pensions and public sector salaries could rise next year in line with living costs. An answer is expected by Friday.