Serbia’s Reserves Decline as the Central Bank Defends the Dinar

Serbia’s Reserves Decline as the Central Bank Defends the Dinar
Serbia’s gross foreign exchange reserves stood at €29.16 billion at the end of October, down €695.3 million from a month earlier, according to figures released by the National Bank of Serbia (NBS).

The central bank presented the remaining buffer as substantial. Reserves covered 151.4% of the M1 money supply and 6.5 months of goods and services imports—more than twice the benchmark used to assess adequate import coverage. Net foreign exchange reserves, after excluding banks’ required-reserve funds and other obligations, totaled €24.66 billion, a monthly decline of €889 million.

The October reduction was driven primarily by activity in the currency market. The NBS said reserve outflows included a net €712 million in foreign-currency sales through domestic-market interventions, as well as €100.7 million in state foreign-currency payments. Inflows from reserve management, donations and other sources reached €285 million.

Separately, the NBS reported that it sold €865 million on the interbank foreign exchange market during October to maintain the dinar’s relative stability against the euro. The dinar’s value against the euro was almost unchanged during the month, although it weakened nominally by 0.2% in the first 10 months of the year. Since January, the central bank has sold €1.34 billion for exchange-rate support.

Market movements also reduced the reserves’ value by €167.6 million, largely because gold prices in U.S. dollars fell 6.3%. A 1.3% strengthening of the dollar against the euro partly offset that effect.