Serbia's central bank will not depreciate a strong dinar to push below-target inflation higher, its governor Jorgovanka Tabakovic said on Thursday. Serbia's inflation in October fell to 1% from 1.1% a month earlier, well below the bank's target of 3%, give or take 1.5 percentage points.
Weak inflation and a strong dinar were the key reasons why the bank further cut its benchmark rate to 2.25% this month.
"We will not use this (depreciation) as a tool to push inflation (upwards)," Tabakovic said while presenting the November inflation report.
To absorb appreciation pressures on the dinar, the bank has purchased over 2.6 billion euros ($2.87 billion) so far in 2019 on the local interbank market. The bank most recently bought 10 million euros on Tuesday.
Euro purchases were the main contributor to a rise of the bank's FX reserves which in October stood at 13.498 billion euros.
On Thursday, the dinar traded at the rate of 117.55 to the euro, or 01.% weaker than the previous close.
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