“NBS will not change exchange rate regime”

The National Bank of Serbia (NBS) is not considering a change of the exchange rate regime, NBS Vice-Governor Veselin Pješčić has said.

Izvor: Tanjug

Thursday, 25.04.2013.

12:35

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BELGRADE The National Bank of Serbia (NBS) is not considering a change of the exchange rate regime, NBS Vice-Governor Veselin Pjescic has said. He noted that the central bank believed that the fluctuating dinar exchange rate was in line with the current economic conditions. “NBS will not change exchange rate regime” Pjescic explained that the fluctuating dinar exchange rate was in accordance with the monetary policy framework - target inflation, which had been consistently implemented since 2006. “However, the NBS still wants to hear the pros and cons regarding the current exchange rate regime, and therefore it has scheduled a round table on Friday exploring the topic of the exchange rate policy which is good for Serbia,” he told Belgrade-based daily Blic. Asked how the dinar was maintained at a higher level this year since it went up against the euro by 1.9 percent since the beginning of the year compared to autumn 2012, the vice-governor said that the strengthening of the dinar was a consequence of greater restrictiveness of the monetary policy and implementation of the measures of fiscal consolidation. “In the circumstances of great differences between the interest rates on dinar and leading world currencies loans, high liquidity in the international market, and positive stance of domestic and international investors in terms of sustainability of our macroeconomic policy - the demand for the dinar has increased, which encouraged its strengthening,” Pjescic noted. “The NBS has on a number of occasions increased the level of restrictiveness of the monetary policy by raising the reference interest rate, and it changed the direction of the main operations towards withdrawal of liquidity from the banking system which could put pressure of the dinar exchange rate,” the vice-governor concluded. Tanjug

“NBS will not change exchange rate regime”

Pješčić explained that the fluctuating dinar exchange rate was in accordance with the monetary policy framework - target inflation, which had been consistently implemented since 2006.

“However, the NBS still wants to hear the pros and cons regarding the current exchange rate regime, and therefore it has scheduled a round table on Friday exploring the topic of the exchange rate policy which is good for Serbia,” he told Belgrade-based daily Blic.

Asked how the dinar was maintained at a higher level this year since it went up against the euro by 1.9 percent since the beginning of the year compared to autumn 2012, the vice-governor said that the strengthening of the dinar was a consequence of greater restrictiveness of the monetary policy and implementation of the measures of fiscal consolidation.

“In the circumstances of great differences between the interest rates on dinar and leading world currencies loans, high liquidity in the international market, and positive stance of domestic and international investors in terms of sustainability of our macroeconomic policy - the demand for the dinar has increased, which encouraged its strengthening,” Pješčić noted.

“The NBS has on a number of occasions increased the level of restrictiveness of the monetary policy by raising the reference interest rate, and it changed the direction of the main operations towards withdrawal of liquidity from the banking system which could put pressure of the dinar exchange rate,” the vice-governor concluded.

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