Serbia's FX reserves drop in June amid gold price fall

Serbia's foreign exchange reserves fell by €273.2 million in June to €29.61 billion, according to the National Bank of Serbia (NBS). The central bank stated that these reserves remain well above international adequacy standards. Gross reserves covered 6.8 months of imports and 164.3% of the narrow money supply (M1), more than double the adequate level.

Net foreign exchange reserves saw a larger drop of €362.8 million from the end of May, totaling €25.06 billion. Reserve inflows were driven by a net purchase of €270 million on the domestic foreign exchange market, alongside banks' reserve requirements and other sources. These inflows more than offset €411.8 million in government foreign debt repayments.

The overall decline in reserves was significantly influenced by negative valuation effects amounting to €474.9 million. This was mainly attributed to an 11.4% decrease in the U.S. dollar price of gold. The impact was partially counteracted by a 2.2% appreciation of the U.S. dollar against the Euro.

Serbia's gold holdings reached a record 54.6 tonnes at the end of June, following the NBS's purchase of 250.9 kilograms from Serbia Zijin Copper. Despite the increase in volume, the value of these gold reserves decreased by €617.7 million during the month to €6.2 billion due to lower international gold prices. Gold constituted 20.9% of the country's gross FX reserves.