31 March 2021

Central Bank to reduce the extent of its regular programme of foreign currency sales

From Wednesday, 7 April 2021 through the end of the month, the Central Bank of Iceland will sell 3 million euros to market makers in the foreign exchange market three business days per week, for a total of 33 million euros during the month. The transactions will take place every Monday, Wednesday and Friday soon after the market opens, and no later than 10:00 hrs. The transactions are in accordance with Press Release no. 30/2020, published on 9 September 2020.

With this decision, the Central Bank reduces the frequency and scope of the regular foreign currency sales programme, which commenced on 14 September 2020. Based on the exchange rate developments of the Icelandic króna in recent weeks and indications of improved equilibrium in the foreign exchange market, the Central Bank considers it appropriate to reduce the extent of the programme. The objectives of the regular sales programme remain the same as before, to deepen the market and improve price formation.

At the end of each month, the Bank will continue to announce the amount and planned transaction dates for the coming month’s currency sales. The amount will be based on market conditions at the time in question. The aim will be to keep the scale of the currency sales consistent with normal market functioning. The Central Bank reserves the right to adjust amounts, frequency, and execution of the sales to ensure the efficacy of the measure.

The Central Bank sold a total 69 million euros (10.4 b.kr.) through the regular sales programme during the month of March. Since 14 September, the Bank has sold a total of 420 million euros (66.2 b.kr.) in this manner.

Regular currency sales do not affect the Bank’s declared policy of intervening in the foreign exchange market as it deems necessary to mitigate volatility.

Further information can be obtained from Ásgeir Jónsson, Governor of the Central Bank of Iceland, at tel: +354 569-9600.

See press release from 9 September 2020: Central bank to begin regular programme of foreign currency sales.

Press release no. 10/2021
31 March 2021