29.07.2004.

NBS on Dinar Exchange Rate Policy

In reply to article published in the ‘Nacional’ daily, quoting an owner of an licensed exchange dealer that ‘’by the end of the year the euro against dinar exchange rate would increase to 100 dinars for one euro, and that already by autumn one euro will be worth 80 dinars’’, the National Bank of Serbia would like to inform the public that the dinar exchange rate policy is geared towards achieving the primary task of the central bank and that is to keep the inflation rate in line with this year’s Monetary Policy Programme which targets the inflation rate at 8.5%. The high level of NBS foreign currency reserves is a sufficient guarantee of the successful dinar exchange rate policy and NBS will intervene on the foreign exchange market to pamper the more serious pressures on foreign currency demand side so as to prevent sharp oscillations of the dinar exchange rate, - says a statement from the NBS.

In the first five months of 2004, the retail prices in Serbia have increased by 5.2%, which is exactly how much dinar has depreciated against euro (5.2%) in nominal terms, whereas the dinar counter value of euro increased by 5.5%. The statement of the self-proclaimed ‘monetary expert’ that ‘‘following the several months of stagnation, the purchase of foreign cash from citizens has virtually ceased’’ – is completely untruthful statement. In the seven months of the year 2004 the NBS and licensed dealers have purchased from citizens 24% of foreign cash more than in the matching period last year, so that there could be no talk of stagnation, let alone cessation in purchase of foreign cash.

Press Release from Governor’s Cabinet