Serbian Dinar Weakens to Record Low on Political Turmoil

The Serbian dinar fell to a record- low against the euro today, extending declines for a third session amid uncertainty over who will form a government after an inconclusive May 6 parliamentary election and the victory of opposition leader in a May 20 presidential runoff.

The currency lost as much as 1 percent from yesterday’s official close to touch 115.9075 before rebounding to trade at 115.8419 at 10:16 a.m. in Belgrade, according to data compiled by Bloomberg.

The fall prompted the National Bank of Serbia to sell euros, Ljiljana Grubic, chief analyst at Belgrade-based Raiffeisen Banka AD said, adding that “interventions may only slow the dinar weakening, but won’t resolve problems” including weak export and credit activity.

Serbian opposition leader Tomislav Nikolic’s upset presidential victory over incumbent President Boris Tadic deepened the former Yugoslav republic’s political stalemate.

Nikolic is expected to find it difficult to name a candidate for prime minister who would be able to secure a parliamentary majority following the vote for legislators. Both Nikolic’s Progressive Party and Tadic’s Democratic Party lack a majority needed to confirm a new government.

The central bank has sold 898.5 million euros ($1.1 billion) this year so far to prop up the dinar.

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net