"No alarming changes" in foreign exchange market

BELGRADE -- NBS Governor Jorgovanka Tabaković says there are "no alarming changes or unusual developments in the foreign exchange market as reported by certain media."

Jorgovanka Tabaković (Beta, file)
Jorgovanka Tabaković (Beta, file)

These reports are at the same time announcing a drop in the value of the Serbian dinar (RSD) by the end of the year.

Tabaković believes that after relatively stable developments of the foreign exchange rate in August, the drop of the dinar in early September was initiated by the maturity of the dinar-denominated securities in the portfolio of foreign investors and their caution concerning the refunding, which contributed to an increase in the demand for foreign exchange.

The central bank (NBS) stated that such developments are temporary and were brought about primarily by the uncertainties in terms of the monetary policy which would be conducted by FED and ECB in the time to come.

These factors have a similar effect on the currencies in other regional countries which maintain the floating exchange rate regime, the NBS governor said in a statement for the media.

Tabaković also said that the local market, which has been integrated into the global financial flows, is still insufficiently developed and has a low turnover, which is why even slight increase in demand for foreign exchange caused by psychological factors can trigger considerable foreign exchange rate oscillation.

This is what happened over the past few days, Tabaković said and added that the turnover recorded on Wednesday afternoon shows that the foreign exchange market is calming down.

The NBS recalled that Serbia is not implementing the regime of a fixed exchange rate and rather maintains the fluctuating exchange rate regime, which entails that the exchange rate can either drop or increase and this enables the economy to adjust to shocks from either the local or external environment more easily, states the release.