Dinar leaps, people cheer

The mobile phones were in meltdown

The mobile phones were in meltdown. The price of people's money was leaping and falling - and money dealers were frozen in the confusion, as the impact of Yugoslavia's revolution hit the currency on the streets.

Reports flew across the country that Yugoslavia's currency, the dinar, was exchanging for the deutschmark at massively different rates. "Democratic change in Belgrade makes mess on the street currency market," was the headline in yesterday's Vecerni Novosti.

In the central Serbian town of Cacak the dinar rose from 43 to the mark to 25 and yet prices stayed the same. In nearby Kraljevo, the dinar later dropped again from 25 to 32. Money dealers simply stopped working. Peasants selling vegetables and other black-market goods stopped selling because they couldn't price their wares.

"On Saturday we were selling 38 dinars to the mark. On Sunday the rate was 22. Now we are selling at 25 and buying at 30," said money dealer Zoran Mitrovic. "But everybody likes it and is cheering about what's happening. A stable situation is more important to them than prices."

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Dr Milan Kovacevic, founder of the respected G17 economist group - which is close to the new President - explained the dinar's dramatic strengthening. "Representatives from G17 met Yugoslav National Bank governor Dusan Vlatkovic on Saturday and he promised that he would not sell foreign currency and that he would stop printing dinars."

Dr Kovacevic also explained that psychologically the mood across Serbia had changed totally. People are now counting on an influx of foreign capital, so are not selling dinars. President Vojislav Kostunica has improved the trade environment within the Yugoslav federation by lifting the barriers on transfer of goods between Serbia and Montenegro and "people are feeling now that the future is brighter".

Asked if foreign money had been given specifically to stabilise the dinar, he said: "No, I'm pretty certain about that."

The Yugoslav National Bank holds $285 million hard currency. But faced with economic difficulties, the regime of Slobodan Milosevic resorted to printing money to pay its debts.

The national bank has been massively increasing the money supply over the past year - pumping more dinars into the economy and reducing the value. Prices went up to keep pace.