Cvetkovic Says Serbian Dinar Weakening Is `Temporary,' to Stabilize Soon

Serbian Prime Minister Mirko Cvetkovic said the recent weakening of the dinar is “temporary” and that the currency should stabilize “soon.”

Industrial output rose 11 percent over the first four months of the year as the economy recovers from its first recession in more than a decade, Cvetkovic told a news conference in Belgrade today.

“I also don’t expect the central bank to increase the repurchase rate because of slow inflation and the high level of currency reserves,” Cvetkovic said.

The economy contracted 3 percent last year, when the Balkan nation took a 3 billion-euro ($ billion) bailout loan from the International Monetary Fund to bolster currency reserves. The central bank expects gross domestic product to grow 1.5 percent in 2010 and 3 percent in 2011. Industrial production grew 4.8 percent in April from the previous month, Cvetkovic said today.

The dinar has weakened about 8 percent against the euro this year, Bloomberg data shows. It traded at 102.80 per euro as of 4:07 p.m. in Belgrade, versus 102.71 the previous trading day.

To contact the reporter on this story: Aleksandra Nenadovic in Belgrade at anenadovic@bloomberg.net

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