Currency continues sliding

Belgrade June, 07. 2010 (Serbia Today) - Economic experts believes that the Serbian dinar (RSD) will continue to slide during this year and could reach the value of RSD 105-106 per euro, reported Tanjug news agency. Experts also believe that an introduction of the euro as the currency in Serbia would not be received well by the European Central Bank. Serbian president's economic advisor Jurij Bajec said that it is hard to predict further weakening of the dinar, stating that it should not exceed the RSD 105-106 mark. “That is a lot too, considering that inflation will not be greater than six percent by the end of 2010”, he told Radio Television Serbia. Bajec said that the long-term solution for strengthening the dinar would be to improve exports and attract direct investments, adding that exports have increased by 11 percent in Serbia during the first four months of the year. He said that figure is still higher in some neighboring countries, if measured according to exports per capita. When asked how to react to the domestic currency situation, the candidate for the new National Bank of Serbia governor, Dejan Šoškić, said that selling foreign currency from the reserves would only have a short-term effect on stabilizing the dinar. “Long-term stabilization is only possible by increasing the competitiveness of the Serbian industry, increasing exports and attracting foreign investments” Šoškić said. He said that there are two ways to introduce the euro as an official currency – “unilaterally like Montenegro and Kosovo, or by becoming an EU member-state.” Šoškić also said that the ECB would not react well to the former, since Serbia has a high budget deficit, adding that the country would have to decrease spending, prices, wages in the public sector and pensions in order for this to be acceptable, which would not benefit the citizens. Opposition DSS economic expert Nenad Popović commented on the same subject to say that the dinar’s value is a telltale sign of the current situation in the Serbian economy.  He stated that the stability can be defended in the next five to six month with the help of the money from the International Monetary Fund arrangement. However, Popović also noted that Serbia must improve its exports and economy and attract foreign investors in the next year in order to “pump in fresh money” and stabilize the domestic currency.