In the past ten days, Belgrade’s exchange offices have reported a significant increase in the demand for euros, which may be linked to the recent political developments in Serbia. The announcement of the Prime Minister’s resignation yesterday, following a series of incidents, protests, blockades, and arrests related to the Novi Sad canopy case, has created a sense of uncertainty among citizens.
The National Bank of Serbia (NBS) attributes the rising demand for foreign exchange to seasonal factors, while also noting that the current shortage of euros on the market is due to a decline in foreign investment inflows.
Exchange offices have confirmed that demand for euros has surged in recent days, although the supply of foreign currency remains stable. The NBS is actively involved in the foreign exchange market, buying and selling currencies to maintain a stable exchange rate.
Despite these efforts, the dinar has weakened against the euro and is currently at its lowest point since the beginning of this year. The average exchange rate stands at 117.222 dinars to the euro, slightly weaker than yesterday’s rate of 117.224. At the beginning of 2025, the dinar was trading at 117.115, and it reached its strongest value in February, when the average exchange rate was 117.048.
Over the past two months, the NBS has reduced its foreign exchange reserves, which are used to support the dinar against the euro. From the start of 2025 until the end of February, the NBS sold a net total of 745 million euros, including 420 million euros in January and 325 million euros in February.
The NBS explained that the increased demand for foreign currency in January and February was driven by the seasonal need for euros by residents, especially companies in the energy sector, which needed foreign currency to purchase energy for the winter months. In addition, compared to the beginning of last year, there has been a decrease in foreign direct investment (FDI) inflows. To stabilize the exchange rate, the NBS has used its foreign exchange reserves, which had been accumulated over previous years for such situations.
In 2024, the NBS bought a net total of 2.7 billion euros to maintain the relative stability of the dinar. By the end of December 2024, Serbia’s foreign exchange reserves reached a record 29.29 billion euros, and by the end of February 2025, the NBS’ gross foreign exchange reserves stood at 28.8 billion euros.
The balance of payments, including data on FDI inflows for January 2025, is expected to be published today.
Serbia’s political leadership has argued that recent student and civil protests have led to a reduction in FDI inflows, a view previously highlighted by Nova Ekonomija. The rhetoric from top politicians may also be contributing to the increased demand for foreign currency, as citizens seek to safeguard their finances amid growing uncertainty.
