Analysis 27 Oct 17

Serbia’s Newly Mighty Dinar Intrigues Experts

Serbia’s national currency is strengthening markedly, but whether this is because of healthy macro-economic indices or is down to speculators is harder to call.

Stevan Veljovic
BIRN
Belgrade

Milan Culibrk, economic analyst and the editor-in-chief of the weekly NIN, believes that an inflow of short-term speculative foreign capital, seeking a quick profit from government securities, is the key factor in the dinar’s strengthening. Photo: Media Centre Belgrade

After a period of relatively stable value, the Serbian dinar started to strengthen against major world currencies in 2017.

Since February, dinar strengthened in real terms against all leading world currencies, including euro, the Swiss franc and US dollar, by 4 per cent, 10 per cent and 14 per cent respectively.

Before the dinar strengthened, the last time the average monthly exchange rate for a euro was below 120 dinars was more almost three years ago, in November 2014.

Experts attribute the strengthening of the national currency to Serbia’s restrictive monetary policy and macroeconomic stability, but also to the favourable interest rates offered on state securities that may have attracted speculators looking for quick profits.

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