Serbian dinar continues to drop against euro

I think that Serbia should seriously consider do what Malaysia did in 1997, and Malaysia prospered, because of the action they took.

Wikipedia says: Before the crisis, Malaysia had a large current account deficit of 5% of its GDP. At the time, Malaysia was a popular investment destination, and this was reflected in the KLSE or Kuala Lumpur Stock Exchange activity which was regularly the most active stock exchange in the world. with turnover exceeding even markets with far higher capitalization like the New York Stock Exchange. Expectations at the time were that the growth rate would continue, propelling Malaysia to developed status by 2020, a government policy articulated in Wawasan 2020. At the start of 1997, the KLSE Composite index was above 1,200, the ringgit was trading above 2.50 to the dollar, and the overnight rate was below 7%. In July 1997, within days of the Thai baht devaluation, the Malaysian ringgit was attacked by speculators. The overnight rate jumped from under 8% to over 40%. This led to rating downgrades and a general sell off on the stock and currency markets. By end of 1997, ratings had fallen many notches from investment grade to junk, the KLSE had lost more than 50% from above 1,200 to under 600, and the ringgit had lost 50% of its value, and on Jan 23, 1998, falling from above 2.50 to under 4.57 to the dollar. The then premier, Mahathir Mohammad imposed strict capital controls and introduced a 3.80 peg against the US dollar. Malaysian moves involved fixing the local currency to the US dollar, stopping the overseas trade in ringgit currency and other ringgit assets therefore making offshore use of the ringgit invalid, restricting the amount of currency and investments that residents can take abroad, and imposed for foreign portfolio funds, a minimum one-year “stay period” which since has been converted to an exit tax. The decision to make ringgit held abroad invalid has also dried up sources of ringgit held abroad that speculators borrow from to manipulate the ringgit, for example by “selling short.” Those who do, have to purchase back the limited ringgit at higher prices, making it unattractive to them. In 1998, the output of the real economy declined plunging the country into its first recession for many years. The construction sector contracted 23.5%, manufacturing shrunk 9% and the agriculture sector 5.9%. Overall, the country's gross domestic product plunged 6.2% in 1998. During that year, the ringgit plunged below 4.7 and the KLSE fell below 270 points. In September that year, various defensive measures were announced to overcome the crisis. The principal measure taken was to move the ringgit from a free float to a fixed exchange rate regime. Bank Negara fixed the ringgit at 3.8 to the dollar. Capital controls were imposed while aid offered from the IMF was refused. Various task force agencies were formed. The Corporate Debt Restructuring Committee dealt with corporate loans. Danaharta discounted and bought bad loans from banks to facilitate orderly asset realization. Danamodal recapitalized banks. Growth then settled at a slower but more sustainable pace. The massive current account deficit became a fairly substantial surplus. Banks were better capitalized and NPLs were realised in an orderly way. Small banks were bought out by strong ones. A large number of PLCs were unable to regulate their financial affairs and were delisted. Compared to the 1997 current account, by 2005, Malaysia was estimated to have a US$14.06 billion surplus. Asset values however, have not returned to their pre-crisis highs. In 2005 the last of the crisis measures were removed as the ringgit was taken off the fixed exchange system. But unlike the pre-crisis days, it did not appear to be a free float, but a managed float, like the Singapore dollar.

It could be that Serbia may need to default on Some or All IMF Loans, Work Bank Loans, and European Investment Bank Loans, or to restructure these Loans in order to solve the Problems.

The Serbian Department of Finance and Treasury and the National Bank of Serbia should have People who know of the circumstances, and how Malaysia became a Success, and if you want to be a Success, then COPY Successful People.

"At the time, Malaysia was a popular investment destination,..."

And foreign money had been flooding in. Hardly the situation in Serbia these days. The dinar isn't falling because foreigners are selling their shares in Serbian companies, but because the country spends more than it takes in, and especially, exports. This spending is not just by the government - how many Serbs take their summer vacations and spend their money abroad every year? And then there's the political uncertainty, which will continue until there's a working government in place.

I think that Serbia should seriously consider do what Malaysia did in 1997, and Malaysia prospered, because of the action they took.

Wikipedia says: Before the crisis, Malaysia had a large current account deficit of 5% of its GDP. At the time, Malaysia was a popular investment destination, and this was reflected in the KLSE or Kuala Lumpur Stock Exchange activity which was regularly the most active stock exchange in the world. with turnover exceeding even markets with far higher capitalization like the New York Stock Exchange. Expectations at the time were that the growth rate would continue, propelling Malaysia to developed status by 2020, a government policy articulated in Wawasan 2020. At the start of 1997, the KLSE Composite index was above 1,200, the ringgit was trading above 2.50 to the dollar, and the overnight rate was below 7%. In July 1997, within days of the Thai baht devaluation, the Malaysian ringgit was attacked by speculators. The overnight rate jumped from under 8% to over 40%. This led to rating downgrades and a general sell off on the stock and currency markets. By end of 1997, ratings had fallen many notches from investment grade to junk, the KLSE had lost more than 50% from above 1,200 to under 600, and the ringgit had lost 50% of its value, and on Jan 23, 1998, falling from above 2.50 to under 4.57 to the dollar. The then premier, Mahathir Mohammad imposed strict capital controls and introduced a 3.80 peg against the US dollar. Malaysian moves involved fixing the local currency to the US dollar, stopping the overseas trade in ringgit currency and other ringgit assets therefore making offshore use of the ringgit invalid, restricting the amount of currency and investments that residents can take abroad, and imposed for foreign portfolio funds, a minimum one-year “stay period” which since has been converted to an exit tax. The decision to make ringgit held abroad invalid has also dried up sources of ringgit held abroad that speculators borrow from to manipulate the ringgit, for example by “selling short.” Those who do, have to purchase back the limited ringgit at higher prices, making it unattractive to them. In 1998, the output of the real economy declined plunging the country into its first recession for many years. The construction sector contracted 23.5%, manufacturing shrunk 9% and the agriculture sector 5.9%. Overall, the country's gross domestic product plunged 6.2% in 1998. During that year, the ringgit plunged below 4.7 and the KLSE fell below 270 points. In September that year, various defensive measures were announced to overcome the crisis. The principal measure taken was to move the ringgit from a free float to a fixed exchange rate regime. Bank Negara fixed the ringgit at 3.8 to the dollar. Capital controls were imposed while aid offered from the IMF was refused. Various task force agencies were formed. The Corporate Debt Restructuring Committee dealt with corporate loans. Danaharta discounted and bought bad loans from banks to facilitate orderly asset realization. Danamodal recapitalized banks. Growth then settled at a slower but more sustainable pace. The massive current account deficit became a fairly substantial surplus. Banks were better capitalized and NPLs were realised in an orderly way. Small banks were bought out by strong ones. A large number of PLCs were unable to regulate their financial affairs and were delisted. Compared to the 1997 current account, by 2005, Malaysia was estimated to have a US$14.06 billion surplus. Asset values however, have not returned to their pre-crisis highs. In 2005 the last of the crisis measures were removed as the ringgit was taken off the fixed exchange system. But unlike the pre-crisis days, it did not appear to be a free float, but a managed float, like the Singapore dollar.

It could be that Serbia may need to default on Some or All IMF Loans, Work Bank Loans, and European Investment Bank Loans, or to restructure these Loans in order to solve the Problems.

The Serbian Department of Finance and Treasury and the National Bank of Serbia should have People who know of the circumstances, and how Malaysia became a Success, and if you want to be a Success, then COPY Successful People.

"At the time, Malaysia was a popular investment destination,..."

And foreign money had been flooding in. Hardly the situation in Serbia these days. The dinar isn't falling because foreigners are selling their shares in Serbian companies, but because the country spends more than it takes in, and especially, exports. This spending is not just by the government - how many Serbs take their summer vacations and spend their money abroad every year? And then there's the political uncertainty, which will continue until there's a working government in place.