Serbia’s central bank bought euros for the first time since May 2011 to curb gains in the dinar.
The Belgrade-based Narodna Banka Srbije purchased 5 million euros ($6.47 million) today to “smooth the dinar’s intraday swings,” the bank said on its website without giving any further details.
Three currency traders in Belgrade who asked to remain unidentified, in line with the policies of their banks, said the central bank was buying euros at just below 111 dinars to the euro. The currency traded at 110.7517 to the euro at 5:15 p.m. in Belgrade, according to data compiled by Bloomberg.
The dinar has strengthened because of tight monetary policy, changes to reserve-requirement rules, carefully allocated liquidity and an increased offer of foreign currencies as banks sell euros to approve subsidized loans, the central bank said in a statement.
“With its measures and precise allocation of dinar and foreign-currency liquidity, it is the duty of the National Bank of Serbia to discourage the longer-term creation of excess liquidity, which allows speculative play in the foreign-exchange market,” the bank said.
The dinar rose 1.39 percent to an intraday high of 110.3866 at 12:28 p.m. in Belgrade, its strongest in seven months. It has gained 4 percent against the euro this month, making it the world’s top performer in October.