US sanctions on Russian-owned NIS shake Serbia’s FX market

Serbia’s central bank sought to calm markets on December 8 after a rush by citizens to buy euros — driven by fears over US sanctions on Russian-owned oil company NIS — caused temporary shortages at some exchange offices and pushed the dinar to its weakest level this year.

The National Bank of Serbia (NBS) said it had intervened by selling euros from its reserves after demand for foreign cash jumped well above normal seasonal levels. The surge followed media reports and online speculation about the potential collapse of NIS, which is majority-owned by Russia’s Gazprom group.

NIS has struggled to secure crude since October 9, when US sanctions stopped deliveries via Croatia’s JANAF pipeline. Serbia’s only refinery, in the town of Pančevo, halted production on December 2 due to a lack of crude, though the company said it is still supplying the domestic market from existing stocks.

The NBS said the public’s euro buying was fuelled by “irrational” panic, adding that the financial system remained stable and that banks had sufficient foreign currency. Local shortages at exchange offices, it said, reflected distribution problems rather than a lack of euros in the system.

The dinar, which began weakening in mid-November, slid to 117.4155 per euro on December 3, its lowest level this year, after President Aleksandar Vucic confirmed Serbia had not obtained a US waiver allowing crude imports for NIS. The currency has since steadied around 117.39.

US sanctions raise the risk of secondary penalties for Serbian banks if they continue processing transactions for NIS. The NBS has previously signalled it may suspend the company’s payment operations without a US licence, potentially leaving NIS unable to pay suppliers or staff, though no such step has yet been taken.

Energy Minister Dubravka Dedovic Handanovic sought to reassure the public on December 8, saying the government would ensure sufficient fuel supply despite the refinery shutdown, noting that Serbia has adequate fuel oil for the winter and additional deliveries of diesel and petrol are en route.