NBS foreign exchange reserves increase to EUR 9.6 billion – Sale of Zelezara contributing factor

Foreign exchange reserves of the National Bank of Serbia at the end of July amounted to EUR 9.6 billion, which is an increase of EUR 314.5 million compared to the end of June, the NBS reported. Foreign exchange reserves at this level cover the money supply (M1) by 220% or six months' worth of import of goods and services.

The June increase in foreign exchange reserves continued in July and was almost entirely due to the interventions of the central bank, which bought EUR 355 million in the foreign exchange market.

Net foreign exchange reserves, i.e. total reserves less banks' foreign exchange balances on account of required reserves and other requirements, amounted to a little over EUR 8 billion at the end of July and were larger by EUR 352 million compared to June.

The increase in both gross and net foreign exchange reserves is particularly important considering that it was made in the still turbulent environment of the international financial markets.

In addition to the inflow from the NBS's foreign exchange purchase in the international foreign exchange market, there was inflow of EUR 46 million on the account of privatization of Zelezara Smederevo and EUR 3.4 million on account of net disbursement of international loans.

In July, the said inflows were much larger than the outflows from foreign exchange reserves, which resulted mainly from the reduction in foreign exchange reserves (EUR 38.9 million), settling of liabilities in respect of frozen foreign exchange savings (EUR 26.5 million) and other grounds (EUR 24.5 million).

Narodna banka Srbije Beograd

Železara Smederevo d.o.o.

National Bank of Serbia foreign exchange reserves

NBS

coverage of money supply

frozen foreign exchange savings