Yugoslavs Announce Big Dinar Devaluation With AM-Yugoslavia
BELGRADE, Yugoslavia (AP) _ Yugoslavia announced a huge devaluation of the dinar against major Western currencies Friday in an effort to prop up its war-shattered economy and fight a monthly inflation rate of 240 percent.
The new exchange rate is 48,000 dinars to a dollar. The old official rate was 750 dinars to a dollar. The devaluation brings the official rate in line with the parallel market rate.
The dinar has grown almost worthless as a result of the Serbian government policy of printing banknotes to finance fighting in Croatia and Bosnia- Herzegovina.
The economy has also been badly hurt by U.N. trade sanctions imposed last May on Yugoslavia, now comprised of only Serbia and Montenegro.
Inflation and unemployment have both spiraled.
Pensions and wages are still paid in dinars, meaning Yugoslavs have had to dig into their precious hard currency savings to survive.
People with spare cash have put their savings into private banks that paid phenomenal monthly interest rates, prompting speculation the money was being used for gun-running and smuggling.