Finally, while the cross-border debt is exclusively in foreign currency, domestic debt is partly, and increasingly so, in dinars, reducing the level of FX exposure in the country. Second, the dinar financial market is steadily developing, and the NBS’s strategy of dinarisation is yielding some visible results.
The yield curve has been extended from 12 months in early 2010 to 36 months by March 2011. The longer maturities opened up the bond market to non-resident investors, since they are legally allowed to trade with long-term government securities only. The hedging market is also gaining pace, and the bank credit market is becoming increasingly dinarised.