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FX Reserves and IFEM Movements in November

Gross NBS FX reserves amounted to EUR 11,626.5 mn at end-November, up by EUR 76.2 mn from a month earlier. This level of FX reserves covered 190% of money supply (M1) or around six months’ worth of the country’s imports of goods and services (almost twice the level prescribed by the standard on the adequate level of coverage of the imports of goods and services by FX reserves). 
Net FX reserves (FX reserves less banks’ FX balances on account of required reserves and other requirements) rose by EUR 98 mn from end-October to EUR 9,721 mn, i.e. their highest month-end level since 2000.

The increase in gross FX reserves continued into November, even though the government, as a result of good fiscal results in 2018, reduced its FX liabilities (EUR 108.8 mn net) on account of loans and securities. This led to a further reduction in public debt and improvement of its currency structure.

A rise in gross FX reserves in November was due mainly to FDI inflows, i.e. the privatisation of Poljoprivredna korporacija Beograd AD (PKB) worth EUR 121.2 mn and grants worth EUR 56.7 mn. A further boost to FX reserves came from net inflows from NBS purchase interventions in the interbank FX market (EUR 15 mn) and FX reserves management and other grounds (EUR 42.5 mn). These inflows comfortably covered outflows in respect of government debt repayment (EUR 108.8 mn), banks’ customary activities concerning FX required reserves and other (EUR 32.8 mn net), and a negative impact of market factors (EUR 17.6 mn net), mainly due to a change in currency relationships in the international financial market.

Trading volumes in the IFEM amounted to EUR 543.8 mn in November, down by EUR 46.8 mn from the month before. In the first eleven months of 2018, interbank trading volumes reached EUR 6,281.5 mn.
In November, the dinar remained generally unchanged vis-à-vis the euro. Since the start of the year, it gained 0.1% against the euro in nominal terms. In an environment of somewhat stronger appreciation pressures in mid-November, the NBS intervened in the IFEM by purchasing EUR 15 mn in order to ease excessive short-term volatility of the dinar exchange rate against the euro.

Governor’s Office