Citizens buying foreign currency more frequently due to situation with NIS company - There will be no shortage of foreign currency, dinar exchange rate against euro remains stable, NBS says

The National Bank of Serbia has announced that over the past two weeks there has been an increase in demand for foreign currency on the domestic foreign exchange market, which is partly the result of normal seasonal trends, primarily in the domestic companies sector, but to a greater extent the result of increased demand for foreign currency by citizens after the publication of information regarding the NIS company.

- A large part of this demand by citizens is also significantly caused by certain articles in the media and posts on social networks that have no rational and realistic basis, and only contribute to increasing panic among citizens despite the NBS statements, which indicate that the stability of the financial system has not and will not be called into question - the NBS states.

In individual exchange offices, there was, as they state, “an exclusively temporary shortage of euros due to increased demand from citizens for this currency at these exchange offices, which in no way means that there is any problem with the supply of euros and other foreign currencies on the Serbian foreign exchange market.”

- The National Bank of Serbia has all the mechanisms that enable it not to allow any stronger pressures on the dinar-euro exchange rate, and it has proven this, both in previous periods of increased demand from citizens for foreign currency during the COVID pandemic and the beginning of the Ukrainian crisis, and in the current circumstances, when it uses previously accumulated foreign exchange reserves to compensate for the current excess of demand over supply and to prevent excessive fluctuations in the exchange rate. We emphasize that stability has been maintained for more than a decade in periods of the most diverse challenges - they add.

The NBS emphasizes that they are closely monitoring all segments of the foreign exchange market, including foreign exchange operations, both at banks and authorized exchange offices, and assures the public that “there is enough foreign cash in the banking sector and at the National Bank of Serbia, and that the channel for supplying banks with foreign cash is functioning smoothly.”

- The fact that some exchange offices do not have enough foreign cash is the result of their lack of foreign cash supply from banks. Experience from previous similar periods has shown that authorized exchange offices use this supply channel less than banks, that is, they try to supply each other, and that when demand from citizens increases, exchange offices keep cash for their clients and raise the price (selling rate) on the exchange market. This means that there is no shortage of foreign cash, but that not all capacities for its acquisition are being used. In order to objectively and responsibly inform the public, the National Bank of Serbia also emphasizes that the dinar to euro exchange rate is not and will not be threatened. The Central Bank, in a managed floating exchange rate regime, exercises its right to intervene, both by buying and selling foreign currency, in order to preserve the relative stability of the exchange rate - the NBS said.