Serbia's central bank buys euros to rein in dinar

BELGRADE: Serbia's central bank bought an unspecified amount of euros on the local interbank market on Friday to help rein in the dinar, which has been bolstered by foreign direct investments and the currency carry trade, dealers said.

The bank intervened as the dinar traded at around 117.84 to euro, the preferred foreign currency in Serbia, a candidate for European Union membership. After the intervention the dinar weakened mildly to 118, dealers said.

The carry trade strategy sees investors borrow in currencies where interest rates are low to invest in countries where yields are high, such as in emerging markets. Investors can pocket the difference, or 'carry'.