NBS sells EUR 40mn, exchange rate stagnates

Serbia is dying by the same disease of other neighborugh countries...Borrowing in a foreign currency...and allowing foreign banks to control all the internal market,...AMEN there is no cure other than defaulting...

To Winston:
1) If you think that the candidate status will suddenly solve all the (financial) problems of Serbia, you are wrong. It's ilogical. Serbia is still responsible for its own well-being. The candidate status and membership is a chance and opportunity, but it is up to Serbia and the people what they make out of it.
2) People are free to take their credits in Dinars. If they take it in euros or dollars because they might believe populist statements that the euro is weak, the EU will fail or whatever and the Serbian economy soo stable and mighty, it is their own fault. The Dinar was always devaluing against the euro. So people know that their debts will increase compared to the euro. This is also the reason why interests rates are higher, when you borrow money in dinars.
Same for governments and people: If you run into debt, you give up the freedom to make your own decisions and they will make you pay. This is how it works everywhere. Not only in 'the west'. Even the US became very dependent on the Chinese, because they own them a lot of money.

I read somewhere that in reality the Euro should be somewhere about 150 dinars, because the dinar has practically little value. This downward spiral is another bad sign for most Serbs with existing credits, as they are mostly based on the Euro, thus making monthly payments rise every time the dinar goes down. Wonder how much more the NSB can afford to sell, before it just sits back and watches the Serbian economy's bottom fall out. I thought finances would improve once we got EU candidate status? Maybe I'm just not giving it enough time?

Serbia is dying by the same disease of other neighborugh countries...Borrowing in a foreign currency...and allowing foreign banks to control all the internal market,...AMEN there is no cure other than defaulting...Luigi
Senor, that is how the West controls nations today. You loan the government money. they cannot pay it back, and bingo, they have you under their thumbs. It is a lot more effective than missiles, and a lot cheaper. They poor citizens of the indebted nation is held with the check, and the borrowers (governments), go about their merry way, claiming this and that, and everything will be rosy, just keep electing us. Read "The confessions of an economic hitman", by John Perkins. it explains one man's involvement in this economic warfare the West uses today for world dominance.

"Borrowing in a foreign currency...and allowing foreign banks to control all the internal market,...AMEN there is no cure other than defaulting...
(Luigi, 23 March 2012 13:56) "

Government borrowing has been going on for a long while, but these tens-of-millions that the central bank is selling aren't part of the problem. When the dinar firms up, they'll start buying euros back. The IMF recently re-approved that 1.1 billion euro standby agreement to be used for this sort of technical operation - where a sale of 40 million euro is like spending 40 euros to buy dinars when dinars are cheap - and when you have 1,100 euros in your wallet set aside for doing just that. Serbia isn't China, which can afford to spend enough to keep its currency at whatever (almost) level they want, but Serbia can smooth out the day-to-day changes, preventing sudden panics and gambling by international players with the currency and nasty surprises for companies trying to do business abroad.

Short version: don't panic.

"I thought finances would improve once we got EU candidate status? Maybe I'm just not giving it enough time?
(winston, 23 March 2012 13:15) "

Candidate status, but with a big question mark about when, or whether, accession talks will start. And elections are coming up.

Also: a comment to the title-writers - "holds steady" is less negative than "stagnates," especially considering that the bank is fighting to hold the line on further change, not just passively watching events.

2) People are free to take their credits in Dinars. If they take it in euros or dollars because they might believe populist statements that the euro is weak, the EU will fail or whatever and the Serbian economy soo stable and mighty, it is their own fault."
(Observer, 23 March 2012 18:14)

Yes. People who were taking a loan in Euro instead of their own currency are gambling. Low interest rates may look attractive, but you have the risk of currency exchange rates. And yes, the Dinar is going down for years. Caused by a trade deficit, Serbia is importing much more than it's importing. Amazingly, the Russian 'friends' are responsible for most of the deficits, because they export much more to Serbia than they import.

It's amazing, too, that the same people who are praying the collaps of the EU and especially the Euro-zone now complain about the Euro being to strong :)

Serbia is dying by the same disease of other neighborugh countries...Borrowing in a foreign currency...and allowing foreign banks to control all the internal market,...AMEN there is no cure other than defaulting...Luigi
Senor, that is how the West controls nations today. You loan the government money. they cannot pay it back, and bingo, they have you under their thumbs. It is a lot more effective than missiles, and a lot cheaper. They poor citizens of the indebted nation is held with the check, and the borrowers (governments), go about their merry way, claiming this and that, and everything will be rosy, just keep electing us. Read "The confessions of an economic hitman", by John Perkins. it explains one man's involvement in this economic warfare the West uses today for world dominance.

I read somewhere that in reality the Euro should be somewhere about 150 dinars, because the dinar has practically little value. This downward spiral is another bad sign for most Serbs with existing credits, as they are mostly based on the Euro, thus making monthly payments rise every time the dinar goes down. Wonder how much more the NSB can afford to sell, before it just sits back and watches the Serbian economy's bottom fall out. I thought finances would improve once we got EU candidate status? Maybe I'm just not giving it enough time?

"Borrowing in a foreign currency...and allowing foreign banks to control all the internal market,...AMEN there is no cure other than defaulting...
(Luigi, 23 March 2012 13:56) "

Government borrowing has been going on for a long while, but these tens-of-millions that the central bank is selling aren't part of the problem. When the dinar firms up, they'll start buying euros back. The IMF recently re-approved that 1.1 billion euro standby agreement to be used for this sort of technical operation - where a sale of 40 million euro is like spending 40 euros to buy dinars when dinars are cheap - and when you have 1,100 euros in your wallet set aside for doing just that. Serbia isn't China, which can afford to spend enough to keep its currency at whatever (almost) level they want, but Serbia can smooth out the day-to-day changes, preventing sudden panics and gambling by international players with the currency and nasty surprises for companies trying to do business abroad.

Short version: don't panic.

To Winston:
1) If you think that the candidate status will suddenly solve all the (financial) problems of Serbia, you are wrong. It's ilogical. Serbia is still responsible for its own well-being. The candidate status and membership is a chance and opportunity, but it is up to Serbia and the people what they make out of it.
2) People are free to take their credits in Dinars. If they take it in euros or dollars because they might believe populist statements that the euro is weak, the EU will fail or whatever and the Serbian economy soo stable and mighty, it is their own fault. The Dinar was always devaluing against the euro. So people know that their debts will increase compared to the euro. This is also the reason why interests rates are higher, when you borrow money in dinars.
Same for governments and people: If you run into debt, you give up the freedom to make your own decisions and they will make you pay. This is how it works everywhere. Not only in 'the west'. Even the US became very dependent on the Chinese, because they own them a lot of money.

"I thought finances would improve once we got EU candidate status? Maybe I'm just not giving it enough time?
(winston, 23 March 2012 13:15) "

Candidate status, but with a big question mark about when, or whether, accession talks will start. And elections are coming up.

Also: a comment to the title-writers - "holds steady" is less negative than "stagnates," especially considering that the bank is fighting to hold the line on further change, not just passively watching events.

Serbia is dying by the same disease of other neighborugh countries...Borrowing in a foreign currency...and allowing foreign banks to control all the internal market,...AMEN there is no cure other than defaulting...

2) People are free to take their credits in Dinars. If they take it in euros or dollars because they might believe populist statements that the euro is weak, the EU will fail or whatever and the Serbian economy soo stable and mighty, it is their own fault."
(Observer, 23 March 2012 18:14)

Yes. People who were taking a loan in Euro instead of their own currency are gambling. Low interest rates may look attractive, but you have the risk of currency exchange rates. And yes, the Dinar is going down for years. Caused by a trade deficit, Serbia is importing much more than it's importing. Amazingly, the Russian 'friends' are responsible for most of the deficits, because they export much more to Serbia than they import.

It's amazing, too, that the same people who are praying the collaps of the EU and especially the Euro-zone now complain about the Euro being to strong :)