CENTRAL BANK INTRODUCES MEASURES TO STABILISE EXCHANGE RATE

ZAGREB, Aug 25 (Hina) - Although this year's exchange rate movement does not overstep limits usual for oscillations within the year, the Croatian National Bank (HNB) says the rate has recently been affected to a certain degree by the speculative behaviour of some banks. This could explain the latest depreciation pressure on the domestic currency which has occurred earlier than usual. In light of this, the central bank has decided to introduce a set of measures aimed at reducing the possibility of exerting such influence on rate movements. The HNB governor has decided to reduce the percentage at which banks and savings banks are allowed to place themselves at exchange risk in relation to liable capital from 25 to 20 percent. This comes into force on Sept. 1. The reduction of the allowed exchange risk percentage has been spurred by the fact that changes in exchange regulations from April have allowed legal persons to purchase foreign currency to put on their own foreign accounts with authorised banks. In turn, this has increased the autonomous influence domestic legal persons have over the overall position of banks, in line with expected rate changes. If necessary, the central bank will undertake additional measures to preserve the stability of the exchange rate and prevent speculative influence on the domestic foreign exchange market. If the central bank's international reserves totalled $4.27 billion, which is almost one billion more than at the end of August 2000, this would provide sufficient room to undertake all measures that might be required to maintain a satisfactory stability of the domestic currency, whose oscillations in the past year did not exceed plus or minus five percent within the fluctuation bands. (hina) ha