Another confirmation that the National Bank of Serbia is pursuing a fair monetary policy and that the comments on a possible “overvaluation of the dinar”, i.e. the statement that the NBS “artificially maintains the exchange rate at a certain level” are unfounded, comes from one of the most respected financial institutions in the world, JP Morgan.
JP Morgan has published a report on the macroeconomic and financial developments forecasted for emerging countries for the coming year (EMOS 2020), which among other things confirms that the Serbian Dinar (RSD) is a realistically evaluated currency.
This assessment is particularly significant because it comes from a completely independent and impartial high-profile institution of international repute, says the NBS.
JP Morgan has distinguished itself in recent years as an institution that closely follows macroeconomic developments in Serbia and reports very objectively to potential and existing investors on Serbia’s progress towards economic stability and progress.
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Of the 25 currencies analyzed from emerging markets (EM) from all over the world, the Serbian Dinar (RSD) and the Philippine Pesos (PHP) are correctly evaluated as currencies with very slight deviations along with the currencies from two other emerging currencies, the Mexican Pesos (MXN) and the Peruvian Sol (PEN). The currencies of the other 21 individual countries, as well as the composite measure of all other currencies observed in developing countries (Global EM), were assessed as “overvalued” or “undervalued”.
It should be noted that the factors that contributed to this assessment of were productivity growth and the share of investments in GDP, as well as a very high FDI influx, which together with domestic investments in infrastructure, contribute to future productivity and export growth, as well as to reducing the country’s external vulnerability and reducing the share of external debt in GDP.
The share that external debt has in the national GDP has been reduced by more than 10 percentage points from 2015 to mid-2019, from 73.5% to 63.3%.
The fact that the model is based on fluctuations in the exchange rate and takes into account both inflation trends and the macroeconomic basis of a country (REER – Real Exchange Rate Effective), as well as taking indicators that provide a macroeconomic picture of a country, validates the credibility of the model.
(Kurir, 08.12.2019)
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