BELGRADE: Serbia's central bank bought euros on the interbank currency market on Friday to stem a mini rally of the dinar, which gained more than 1 percent in Friday's trade, dealers said.
They said the national currency's rally was mostly due to increased demand and the news about probable Chinese investments in Serbia, but was also related to Russia's financial crisis. "The Russian rouble is volatile and dinar's new strenghening may partly be due to a spillover effect," said a Belgrade-based dealer who asked not to be named.
The rouble has seen intense selling pressure this week, but it rose against both the dollar and euro on Friday as officials stepped up verbal support for the battered Russian currency.
Serbia's central bank started purchasing euros, the first such move since July 10, as the dinar traded at 121.1, or 1.07 percent up on Thursday's close.
Last week the central bank cut the mandatory reserve requirement in euros for banks by a percentage point and raised the dinar share of the reserve allocations by 2 percentage points, creating higher demand for the dinar by banks.
Chinese Prime Minister Li Keqiang said in Belgrade this week his country would create an investment fund of $3 billion (2.4 billion euros) to invest in central and eastern Europe.
The central bank has bought 200 million euros so far this year to curb dinar gains, but it has also sold over 1.7 billion euros to prop up the local currency.
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