"Six big banks setting exchange rate for national currency"

Six big banks are effectively setting the exchange rate of the Serbian dinar (RSD), against the euro (EUR), writes a Belgrade daily. Without naming the banks, Vecernje Novosti writes on Thursday that they are "selling and buying euros, and certainly are capable of driving the exchange rate to the level that suits them". "Six big banks setting exchange rate for national currency" By trading in hard currencies in the so-called inter-bank market, the banks in question "create the euro demand and supply and directly influence the price of the EU currency". When there is a risk that the exchange rate may fluctuate significantly during a single day, the National Bank of Serbia (NBS) intervenes by taking part in this trading. Since the beginning of the year the central bank restricted itself only to selling euros, to the current total of 1.28bn - in that way slowing down the fall of the dinar. Another reason for the decline of the domestic currency is the fact that buyers of state-issued securities immediately after collecting in dinars, "escape to euros". An unnamed source quoted by the newspaper said that it was the easiest to "exit" short-term treasury bills issued by the NBS, which currently hold about RSD 50bn, since this type of transaction reaches maturity in 14 days. In light of the fact that the figure stood at RSD 100bn last year, it becomes clear that investors have left for the euro, which created a huge pressure resulting in the weakening of the domestic currency, writes the daily. The situation is different when it comes to long-term treasury bills, considering that they are issued for three and six months and one or two years, and are bought also by foreign banks instead of exclusively by domestic investors. Vecernje novosti

"Six big banks setting exchange rate for national currency"

By trading in hard currencies in the so-called inter-bank market, the banks in question "create the euro demand and supply and directly influence the price of the EU currency".

When there is a risk that the exchange rate may fluctuate significantly during a single day, the National Bank of Serbia (NBS) intervenes by taking part in this trading. Since the beginning of the year the central bank restricted itself only to selling euros, to the current total of 1.28bn - in that way slowing down the fall of the dinar.

Another reason for the decline of the domestic currency is the fact that buyers of state-issued securities immediately after collecting in dinars, "escape to euros".

An unnamed source quoted by the newspaper said that it was the easiest to "exit" short-term treasury bills issued by the NBS, which currently hold about RSD 50bn, since this type of transaction reaches maturity in 14 days.

In light of the fact that the figure stood at RSD 100bn last year, it becomes clear that investors have left for the euro, which created a huge pressure resulting in the weakening of the domestic currency, writes the daily.

The situation is different when it comes to long-term treasury bills, considering that they are issued for three and six months and one or two years, and are bought also by foreign banks instead of exclusively by domestic investors.