21.06.2016

Results of foreign currency auction of 16 June 2016

Results of foreign currency auction of 16 June 2016

On 16 June 2016, the Central Bank of Iceland received offers for the sale of offshore króna assets (1) versus cash payment in foreign currency. The offers were received in connection with the auction advertised by the Bank on 25 May 2016, as an element in the capital account liberalisation strategy publicised by the authorities on 8 June 2015.

It has been decided to accept all offers submitted at an exchange rate of 190 krónur per euro or lower (i.e., those from participants offering to pay 190 kr. or more per euro). A total of 1,646 offers were submitted and 1,619 accepted; however, these figures could be subject to change upon final settlement. The amount of the accepted offers totalled just over 72 b.kr., out of nearly 178 b.kr. offered for sale in the auction. The Central Bank of Iceland’s foreign exchange reserves will be reduced by just over 47 b.kr. as a result of the auction.

Following these results, the Central Bank of Iceland has decided to offer to purchase offshore króna assets not sold in the auction at the auction exchange rate of 190 kr. per euro. Requests for such transactions shall be received by the Central Bank through an intermediary before 10:00 hrs. on Monday 27 June 2016. As a result of such transactions, the amount of offshore króna assets purchased by the Bank could prove larger than is stated in this press release. Further information on the structure and terms of such transactions will be published tomorrow.

The final results of the 16 June 2016 foreign currency auction, including transactions that may result from the aforementioned decision, will be published after settlement is complete on 29 June 2016. Settlement of transactions based on the above-mentioned offer by the Central Bank of Iceland will take place that same day.

The 16 June 2016 auction was the last in a series of twenty-three auctions in which owners of offshore krónur were invited to purchase foreign currency before the authorities begin lifting capital controls on resident entities; i.e., pension funds, other legal entities, and individuals.

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

No. 17/2016
21 June 2016

 

(1) Offshore króna assets are defined here as is set forth in Act no. 37/2016.

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