The National Bank of Serbia (NBS) announced that the country’s gross foreign exchange reserves at the end of June amounted to 27.5 billion euros. This marks the highest level of gross foreign reserves since 2000, according to available data. Compared to the end of May, foreign reserves increased by 2.3 billion euros.
The amount of foreign reserves provides coverage for the M1 monetary aggregate at 178.7% and covers 7.3 months of imports of goods and services, which is more than double the standard considered adequate for import coverage by foreign reserves.
Net foreign reserves (gross reserves reduced by banks’ foreign exchange assets due to required reserves, obligations to the International Monetary Fund under arrangements and other grounds) also reached their highest level at 23.2 billion euros by the end of June, increasing by 2.2 billion euros compared to the end of May.
The largest inflow into foreign reserves in June, totaling 1.3 billion euros, came from the issuance of Serbia’s ten-year dollar-denominated sustainable eurobonds (Sustainability Bond) on the international financial market, as reported by the NBS. Inflows also included interventions by the NBS through the purchase of foreign exchange on the domestic foreign exchange market totaling 530 million euros, net foreign currency loans amounting to 223.3 million euros, and management of foreign reserves, donations, and other sources totaling 156.6 million euros.
According to the NBS, these inflows more than offset outflows from foreign reserves, which were used to settle state foreign obligations and other payments totaling 88.1 million euros.
The increase in foreign reserves was also influenced by a positive net effect of market factors amounting to 161.9 million euros, largely driven by the strengthening of the dollar against the euro by approximately 1.3%, while the decrease in the price of gold by around 0.7% on the international market had the opposite effect.
The volume of foreign exchange trading on the interbank foreign exchange market in June amounted to 613.4 million euros, an increase of 111.8 million euros compared to the previous month. For the first six months of this year, a total of 3.9 billion euros was traded on the interbank market.
In June, the value of the dinar against the euro remained almost unchanged, while since the beginning of the year, the dinar has nominally strengthened against the euro by 0.1%. The NBS purchased 695 million euros on the interbank foreign exchange market in June.
The NBS stated that it had net purchased 1.330 billion euros this year to maintain relative stability in the exchange rate of the dinar against the euro.
