(Adds central bank statement)
BELGRADE Jan 27 Serbia's central bank
intervened to support its dinar currency on Monday, as the
Balkan country heads for early parliamentary elections that
could complicate loan talks with the IMF.
The bank sold 60 million euros ($82 million), it said in a
statement, after the currency hit 116.15 to the euro, its lowest
rate in more than a year.
Dealers linked the slide of the dinar to a decision on
Sunday by the centre-right SNS party, the largest in the ruling
coalition, to seek an election in March, a vote now likely to be
called within days.
"This (the weakening of the dinar) is an initial reaction to
the news about elections. I don't expect to see big oscillations
during this campaign," said a dealer, who declined to be named.
"I don't expect the dinar to go below 116.5 to the euro."
The central bank has so far sold about 200 million euros
this year to bolster the dinar. Serbia's currency reserves stood
at 11.2 billion euros in December.
Serbia's president is expected to call the election for
March 16 and the SNS party is expected to win the vote, giving
it a stronger mandate for what it says will be tough, long-term
reforms to cut public spending and strengthen the economy.
Markets have grown nervous about the pace of reform.
The snap poll might complicate negotiations with the
International Monetary Fund on a new precautionary loan deal,
set to begin on Feb. 26.
"All I can tell you for sure at this moment is that our
negotiating mission will come on Feb. 26 as announced before,"
Daehaeng Kim, the Fund's resident representative for Serbia,
"When we made the announcement, we had already considered
...possible early elections."
($1 = 0.7307 euros)
(Reporting by Aleksandar Vasovic and Ivana Sekularac; Editing
by Matt Robinson/Ruth Pitchford)