Serbian central bank governor expects some weakening of dinar in Q4

Seasonal higher demand for foreign currency could exert some pressure for weakening the dinar in Q4, NBS Governor Jorgovanka Tabakovic said in an interview with the daily Politika over the weekend. She noted that the central bank has been carefully analyzing the potential impact of all factors and stands ready, if necessary, to react to preserve the relative stability of the exchange rate and smooth functioning of the market. Tabakovic said that the strengthening of the dinar this year owed to the achieved political and financial stability, higher FDI inflows and increased foreign investment in dinar bonds. She added that another factor was the increased demand for domestic currency by residents and increased lending activity of banks. The NBS governor reminded that the central bank has bought EUR1.3bn and sold EUR375m since the beginning of the year, adding that the dinar appreciated by 3.4% YTD.

Asked about the potential negative impact on exporters from the strengthening of the dinar, Tabakovic said that the analyses of the central bank show that the impact of the real exchange rate on exports and imports is low. She elaborated that a large number of products exported by Serbia have a high share of import components, so the impact of the exchange rate on the price competitiveness of these products is significantly reduced.

Tabakovic was elusive when asked whether she could become Serbia’s next prime minister after early or regular parliamentary elections.

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