http://www.b92.net/eng/news/economy-article.php?yyyy=2007&mm=07&dd=02&nav_category=95&nav_id=42167
Euro falls to RSD 78.4 2 July 2007 | 11:28 | Source: Beta *BELGRADE -- The value of the euro has fallen to its mid-December 2004 rate. * The buying rate today is RSD 78.4, the same it was in December of last year and 2004, which was also the so-called “black rate” of October 2000. The euro reached its peak in May 2006, when the exchange rate was at RSD 88 for one euro. Economist Milan Kovačević said that the decrease in value in relation to the Serbian dinar is the result of measures implemented by the National Bank of Serbia (NBS) to protect the economy from an “inflatory budget” for this year. The weakening of the euro is also attributed to smaller foreign currency reserves in the NBS in the first quarter, compared to last year. Kovačević believes that the forced increase of the dinar's worth by the NBS aims to decrease inflation. He said that the central bank does not have many mechanisms to defend the value of the dinar because the foreign currency reserves are already too high, as are the interest rates. Kovačević said that a better measure for the NBS would be to decrease the referential interest rates, which would decrease all other interest rates on the banking market. He concluded that the situation with the foreign currency market is not beneficial for exporters or those selling products on the Serbian market, because the current conditions of the dinar's value are still uncompetitive in the long-term, and therefore economic growth may be made more difficult.
