Moreover, after the first two weeks this year when, as we had expected, demand for foreign currency went up substantially, the NBS intervened in the Interbank Foreign Exchange Market session on one day only. Do we need another proof that the exchange rate is freely formed? Last year's inflation of 6.5% in Serbia matches the level achieved by its neighbours.
To illustrate, by applying the foreign exchange regime of the currency board, Bulgaria recorded 6.5% also, Bosnia 6.0%, while Hungary reached 6.5% and Romania 4.9%. Building on this, and primarily on the low inflation recorded in the final quarter of 2006, in 2007 the National Bank of Serbia will target the lower band of the 4-8% core inflation corridor, set already in August 2006.