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Could the coronavirus disturb the stability of the euro, that is, the dinar? The National Bank of Serbia says that foreign exchange reserves were reduced by 338.8 million euros in September, which is less than the previous month. However, they also ensure that they are doing everything possible to keep the exchange rate stable. Economic experts, however, warn that if the dinar weakens, borrowers could pay the highest price.
Does the exchange rate we see in the exchange houses reflect the real strength of the euro or is its maintenance “artificial” on Wednesday? The National Bank of Serbia notes that the activities carried out in the foreign exchange market, despite the pandemic, are aimed at preserving the stability of the exchange rate.
“It is well known that preserving the relative stability of the exchange rate plays a very important role in the national economy and achieving the basic objectives of the NBS: financial and price stability, in an environment of even greater euroization of the national economy. Through its proactive action and responsible behavior over the past eight years, the NBS relative exchange rate stability, even in crisis conditions caused by the spread of the coronavirus, but also in many other crisis situations in the past, which were not few, caused by risks in the international environment (such as Brexit, falls in the stock market, major turmoil in the international financial and commodity markets etc.) or inherited problems “, states the NBS.
The National Bank of Serbia also says that under the current conditions of pressure to weaken the dinar, they are cautiously using previously increased foreign exchange reserves. In addition, the Central Bank indicates that they bought more euros last year than were sold this year. In the first nine months of this year, the NBS sold more than 1.6 billion euros, while in the same period last year it bought more than 2.1 billion. However, do citizens have reason to worry if the dinar weakens and the euro strengthens?
“A sudden devaluation would increase loan installments, both for citizens and for the economy, because if the euro is now, say, about 120, and if it is, say, 150, that means that your salary remains the same in dinars, and their quota suddenly increases by 20, 30 percent, and that would call into question the financial stability of both citizens and companies, so it could lead to bankruptcy in some cases ”, explains the editor of Novi magazine, Mijat Lakićević.
And to avoid bankruptcy, the state should change its monetary policy so that the dinar is sustainable, warns Mijat Lakićević, editor of Novi magazine.
“The big reason is that the state and the government, if they want that way, take into account their interests first, and on the other hand not the interests of the economy, because such a strong dinar is not really crucial for exporters.” . So those who produce and export something here and sell it on the foreign market, it doesn’t pay off, it turns out well for those who import and that is the key problem with the dinar exchange rate that we have had for several years ”, Lakićević adds.
For the situation to remain stable, the experts point out that the objective of the National Bank should be to improve the development of the national-exporting economy through exchange rate policy, which, as they warn, it is not implementing at this time.
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