August 16 (SeeNews) - Serbia's financial stability will remain unaffected by the depreciation of the Turkish lira as the resilience of the country's financial system against external shocks was enhanced in recent years, a senior central bank official said.
"There are no concerns regarding the potential spillover of the crisis in Turkey to the domestic financial market as the dinar appreciation factors continue to be active," the monetary operations director of Serbia's central bank, Nikola Dragasevic, said in a video file posted on the website of news agency Tanjug on Wednesday.
The central bank has enhanced the resilience of Serbia's financial system against external shocks by increasing its foreign currency reserves in recent years by 1.1 billion euro ($1.25 billion) since 2012, Dragisevic noted.
The Turkish lira collapsed to an all-time low against the US dollar on August 10, causing a 0.5% depreciation of the euro on the same day. The situation caused concerns among European Central Bank (ECB) officials over the impact of a weak Turkish lira on European banks.
However, according to the analytics director of Serbia's Chamber of Commerce, Bojan Stanic, the crisis will not affect the activity of Turkish investors in Serbia, unless the foreign relations of Turkey with the European Union (EU) and the USA worsen further.
"What is dangerous for Serbia is the potential negative effect of the Turkish currency crisis on the EU market, as the bulk of foreign direct investments into Serbia come from the bloc," Stanic said in a separate video file posted on the website of Tanjug.
The situation may also have an impact on Serbia's plans to increase its exports to Turkey and reduce its bilateral trade deficit with the country, Stanic noted.
Serbia's trade minister Rasim Ljajic said in March the two countries' parliaments should ratify as soon as possible a Free Trade Agreement to increase the trade exchange to $2 billion from $1.2 billion.
In October, Turkish president Recep Tayyip Erdogan said Turkey's Exim Bank can extend loans with an interest rate of 1.6% to Serbia to support infrastructure projects in the country as Turkish companies are expected to double the number of their employees in Serbia in 2018.
Several Turkish textile companies have announced plans for the opening of production factories in Serbia since the beginning of 2018, while conglomerate Cengiz holding is reportedly interested in participating in the tender for a strategic partner in Serbian state-run copper miner and smelter RTB Bor.
($ = 0.8791 euro)