Serbia's dinar second-best performing currency in Europe

Serbia's dinar is the second-best performing currency in Europe this year as investors bet the Balkan nation’s ability to attract foreign capital will outweigh the prospect of a delay in European Union entry, the U.S. business and financial news agency Bloomberg announced Friday (9 December 2011).

The dinar gained 0.8 percent against the euro in a single day on Dec. 2 after Societe Generale SA said it will increase lending in the former Yugoslav republic.

It has advanced 2.7 percent this year, more than any European currency except the Moldovan leu as the 27-nation EU’s markets have been wracked by the sovereign-debt crisis.

Bloomberg writes that optimism over investment and economic prospects are rising, outweighing concern the EU will reject Serbia’s candidacy.

- I don’t think anyone these days buys Serbia on the back of the EU accession story,” Timothy Ash, the head of emerging markets at the Royal Bank of Scotland in London, said in a Dec. 6 e-mail . “I don’t tend to think investors will be particularly concerned by the latest development” as they “don’t see EU accession in quite the same light anymore after Euro periphery problems.”

Bloomberg reminds that the European Commission said on Oct. 12, when it recommended candidate status, that Serbia, shunned by western investors under former President Slobodan Milosevic, has made progress in overhauling its economy and stabilizing the political system.