April 9, 2014 / 11:47 AM / 6 years ago

Serbia's central bank intervenes to halt dinar gains

BELGRADE, April 9 (Reuters) - Serbia’s central bank stepped in to purchase euros from banks for the third straight day on Wednesday, aiming to add liquidity to the local market and prevent excessive strengthening of the dinar currency, dealers said.

This is the bank’s sixth attempt to cap dinar’s gains since the Serbian Progressive Party (SNS) won a snap parliamentary election last month, fuelling expectations of a new reform drive.

The party, led by the outgoing deputy Prime Minister Aleksandar Vucic, won 158 seats in the 250-member parliament on March 16, enough to rule alone, but has indicated it wants to form a broader alliance needed for reforms.

The SNS has started coalition talks with former coalition partners, the Socialist Party, as well as with an ethnic Hungarian minority party and the New Democratic Party of former President Boris Tadic.

Vucic has pledged to implement austerity measures sought by the International Monetary Fund to secure a new precautionary loan. The Fund wants Serbia to cut its 2014 consolidated budget gap, seen at 7.1 percent of output, and reduce spending.

The central bank which keeps the dinar in a managed float against the euro. So far this year, it has bought a total of 70 million euros ($96.56 million). It last intervened on Tuesday with a purchase of 20 million euros. ($1 = 0.7249 euros) (Reporting by Aleksandar Vasovic; Editing by Zoran Radosavljevic and Angus MacSwan)

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