The weakening of the Serbian dinar to euro this year is the result of seasonal factors such as increased energy imports and expectations of U.S. Federal Reserve rate hikes, Central Bank Governor Jorgovanka Tabakovic was quoted as saying on Thursday.
The dinar has lost around 0.4 percent to the euro so far this year and the central bank sold a total of 240 million euros ($259.06 million) on the domestic interbanking market to bolster it. It last intervened on Wednesday with a 15 million euro sale. In its report, the Belgrade-based daily Blic quoted Tabakovic as saying that the higher demand for foreign currencies is seasonal due to increased energy imports, but also due to pressures from abroad.
“Largely this is the result of (U.S. Federal Reserve’s) decision to raise benchmark rates and expectations from market players that the U.S. central bank will in the future raise rates faster than initially expected,” Tabakovic was quoted as saying. The Serbian central bank left its main rate unchanged on 12th Jan, amid concerns that a U.S. rate hike could curb investors’ appetite for emerging market assets. The next rate setting meeting is set for 14the February.
Tabakovic said that the bank will continue to intervene to prevent its excessive oscillations. “The central bank is not targeting a specific exchange rate … but it reacts in a timely manner when needed,” she said.
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