“Loans won’t protect exchange rate”

Economic expert Miodrag Zec said that the exchange rate of the domestic currency cannot be guarded with borrowed money.

Izvor: B92

Saturday, 12.06.2010.

11:40

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Economic expert Miodrag Zec said that the exchange rate of the domestic currency cannot be guarded with borrowed money. The exchange rate on Monday is expected to be about RSD 103.45 per one euro. “Loans won’t protect exchange rate” The creators of the monetary policies reject the idea of introducing a fixed rate, while economists warn that only increases in exports and economic growth can strengthen the domestic currency. National Bank of Serbia (NBS) Governor Radovan Jelasic said that the dinar is expected to increase in value, because “Serbia has an agreement with the International Monetary Fund, and added financial assets have been secured, wages and pensions are frozen, an prices are stable.” Zec, however, said that the exchange rate cannot be secured with further loans. “If imports fall drastically, which can occur, this would benefit the stabilization of the rate, and if exports continue to grow at this dynamic and the industry is forced to export more. The problem is that the rate cannot be guarded with further credit…only increased exports can secure the exchange rate,” Zec said.

“Loans won’t protect exchange rate”

The creators of the monetary policies reject the idea of introducing a fixed rate, while economists warn that only increases in exports and economic growth can strengthen the domestic currency.

National Bank of Serbia (NBS) Governor Radovan Jelašić said that the dinar is expected to increase in value, because “Serbia has an agreement with the International Monetary Fund, and added financial assets have been secured, wages and pensions are frozen, an prices are stable.”

Zec, however, said that the exchange rate cannot be secured with further loans.

“If imports fall drastically, which can occur, this would benefit the stabilization of the rate, and if exports continue to grow at this dynamic and the industry is forced to export more. The problem is that the rate cannot be guarded with further credit…only increased exports can secure the exchange rate,” Zec said.

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