08 September 2005

Foreign currency purchases to meet repayment of Treasury debt

In light of the improved liquidity position of the Treasury, the Minister of Finance has decided to retire more of the government’s foreign debt than had previously been planned. In order to meet the Treasury’s increased foreign currency requirement without depleting foreign exchange reserves, the Central Bank will increase its regular currency purchases in the domestic interbank market. From September 12 to the end of this year, the Bank will purchase 10 million US dollars a week in addition to the 2.5 million dollars that it has purchased weekly so far this year, in order to meet the Treasury’s requirement. Under the new arrangement the Central Bank will make daily purchases of 2.5 million US dollars in the domestic interbank market. The Bank will invite bids from market makers in the FX market before it opens for trading in the mornings.

It is planned to purchase a total of 160 million US dollars until the end of the year for the purpose of repaying the Treasury’s foreign debt.

For further information, contact Birgir Ísleifur Gunnarsson, Chairman of the Board of Governors of the Central Bank of Iceland, tel. +354 569-9600.

No. 27/2005
September 8, 2005