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Foreign exchange market, exchange rate developments and international reserves 2017

Foreign exchange market, exchange rate developments and international reserves 2017

NOTE: This article is from 11. January 2018 and is therefore more than 5 years old.

The króna depreciated by 0.7% in 2017, and interbank market turnover contracted by 42% year-on-year. The Central Bank intervened in the foreign exchange market, primarily in the first half of the year, thereby mitigating exchange rate volatility. The Bank’s net foreign currency purchases in the interbank market totalled 70.3 b.kr. Important steps were taken in the capital account liberalisation process during the year, and general exemptions from most restrictions on movement of capital were granted with regulatory amendments in March. Fluctuations in the exchange rate of the króna were much greater than in the years beforehand, owing to the liberalisation of the capital controls and differing expectations concerning exchange rate developments early in the year. Exchange rate volatility receded markedly during the autumn. The international reserves contracted during the year following the retirement of Treasury foreign debt and the purchase of offshore króna assets. They remain large in historical context, however, measuring 27% of GDP at the end of 2017.

Press release no. 1/2018

11 January 2018