RSD: Rolling Over

We believe that recent weakening of the Serbian dinar against the euro is likely to continue through the short term, as the move by the central bank moving towards monetary loosening reduces the carry appeal of the currency. After the National Bank of Serbia began a monetary loosening cycle by cutting its key two-week repo rate by 50 basis points (bps) to 12.00% on June 9, the currency has since lost 3.0% against the euro. In the near term, we expect the dinar to experience choppy trading, not only driven by local rate expectations but also potential spillover effects from the on-going sovereign debt crisis in Greece, which will weigh on demand for risky assets.

To read the full article, please choose one of the following options: