Is the Serbian Dinar Overvalued? Exchange-Rate Misalignment and Asymmetric Profitability in Fruit Exports and Livestock Fattening

Serbia’s nominal exchange rate has remained near 117 RSD/EUR since 2018, while domestic inflation has persistently exceeded the euro-area rate, producing real appreciation and raising concerns about agricultural competitiveness. This paper assesses dinar misalignment over 2010–2024 using three complementary but non-equivalent benchmarks: purchasing power parity (PPP), the behavioral equilibrium exchange rate (BEER, estimated through Johansen cointegration), and the fundamental equilibrium exchange rate (FEER). The PPP and FEER benchmarks indicate dinar overvaluation of approximately −23% and −13% by end-2024, whereas the fundamentals-based BEER places the dinar close to equilibrium over 2016–2024. These results are interpreted as layered diagnostics of price competitiveness, fundamentals consistency, and external sustainability, rather than as a single jointly identified equilibrium range. Sectoral simulations show strong asymmetry: depreciation raises IRR in export-oriented fruit/IQF production from 3% to 12%, while reducing livestock-fattening IRR from 9% to 6% through higher imported feed costs. Monte Carlo checks confirm these qualitative rankings across plausible pass-through and cost-share ranges. Maintaining the nominal corridor also carries a quasi-fiscal burden: NBS official interest expenses linked to sterilization amount to RSD 111.4 billion over 2021–2024, or 0.07–0.57% of GDP annually. The findings suggest that exchange-rate policy has simultaneous competitiveness, sectoral-distributional and quasi-fiscal dimensions, requiring gradual, transparent and exposure-differentiated policy responses.