Serbia to sell euros, blame dinar weakening on seasonal demand, Fed

Serbia's central bank intervened in the foreign exchange market to buy euros again on Thursday, dealers said, and its central bank governor was quoted as blaming dinar weakness on season factors and the US Federal Reserve. The dinar has lost around 0.4 percent to the euro so far this year and the central bank had previously sold a total of 240 million euros ($259.06 million), on the domestic interbank market to bolster it.
Dealers said that the bank stepped in again on Thursday, selling an unspecified amount of euros with the dinar trading versus euro at the rate of 124.13.
After the intervention, the dinar recovered to the rate of 124.05, Reuters data showed.
Central Bank Governor Jorgovanka Tabakovic, meanwhile, was quoted as saying the weakening of the Serbian dinar to euro this year is the result of seasonal factors such as increased energy imports and expectations of US Federal Reserve rate hikes.
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 the Fed's decision to raise benchmark rates and expectations from market players that the US central bank will in the future raise rates faster than initially expected," Tabakovic said. The Serbian central bank left its main rate unchanged on January 12, amid concerns that a US rate hike could curb investors' appetite for emerging market assets.