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National Bank of Serbia

01/13/2021 | Press release | Distributed by Public on 01/13/2021 10:49

FX reserves and IFEM movements in December

13/01/2021

FX reserves and IFEM movements in December

According to preliminary data, gross NBS FX reserves amounted to EUR 13.5 bn at end-December, up by EUR 648.1 mn from end-November.

During 2020, FX reserves were maintained at an adequate and stable level (they increased by EUR 113.2 mn), thus further strengthening the resilience of the domestic financial system to shocks emanating from the international environment.

Such level of FX reserves ensures 130% coverage of money supply M1 and more than six months' worth of the country's import of goods and services, twice more than the standard on the adequate level of coverage of the import of goods and services by FX reserves.

Net FX reserves (total reserves less banks' FX balances on account of reserve and other requirements) came at EUR 11.1 bn at end-December.

Increase in gross FX reserves in December was achieved in an environment where the government additionally lowered its FX liabilities under loans and securities (EUR 90.9 mn net), thus contributing to the reduction in Serbia's public debt.

The December increase in FX reserves was mainly attributable to inflows on account of the privatisation of Komercijalna Banka (EUR 395.0 mn) and NBS activities in terms of net FX purchases in the domestic FX market (total net effect of spot and swap transactions: EUR +244.0 mn). Additional contribution to the higher level of FX reserves came from net inflows from donations (EUR 122.4 mn), efficient FX reserves management and other grounds (EUR 47.0 mn in total). These inflows were several times higher than outflows on account of the abovementioned net debt repayment of the government (EUR 90.9 mn), banks' FX reserve requirements based on their regular activities and other grounds (total net EUR 55.7 mn), and they fully absorbed the negative impact of market factors (total net EUR 13.7 mn).

The volume of FX trading in the IFEM amounted to EUR 693.5 mn in December, up by EUR 135.1 mn from the month before. In 2020, interbank trading totalled EUR 6,565.7 mn.

In December, as in 2020, the value of the dinar remained almost unchanged vis-à-vis the euro. During the month, the NBS bought EUR 170 mn net in the IFEM. During 2020, it sold EUR 1,450 mn net with a view to preserving the relative stability in the FX market amid significantly heightened global uncertainty caused by the pandemic-induced crisis.

Governor's Office