Intervention Central!

The Balkan forex markets have been rife with intervention, with both Croatia and Serbia moving to stem the appreciation pressures on their currencies. The Croatia National Bank (CNB) bought EUR161.9mn on Tuesday, as the kuna reached HRK7.3907/EUR, which is at the top end of the unit’s HRK7.3000-7.7350/EUR trading range. This was the ninth intervention this year, and followed inflows stemming from corporate borrowing. Given that the foreign dominated banking sector has access to cheap capital which it looks set to continue injecting into Croatia, and FDI inflows are going to remain robust as EU convergence progresses, we expect that the

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