14 January 2014

Domestic foreign exchange market and foreign exchange reserves 2013

Central Bank of Iceland

From now on, the Central Bank will report at the beginning of each year on foreign exchange market developments and changes in the foreign exchange reserves during the preceding year. Early in 2013, after a period of marked ISK depreciation in the final months of 2012, the Central Bank decided to suspend its programme of regular foreign currency purchases, and the króna appreciated significantly thereafter. 

On 15 May 2013, the Bank’s Monetary Policy Committee (MPC) introduced a new policy of more active intervention in the foreign exchange market, which significantly reduced day-to-day fluctuations and overall exchange rate volatility for the remainder of the year. The króna appreciated by nearly 11% in trade-weighted terms in 2013. During the year, the Bank’s net foreign exchange purchases totalled 9 million euros, or just over 1.0 b.kr.  Some of the forward agreements concluded at the end of 2010 in order to reduce foreign currency imbalances in the banking system were settled, strengthening the Bank’s foreign exchange position by over 29 b.kr. Also concluded during the year were foreign exchange agreements entailing foreign currency outflows in the amount of 6 b.kr. 

See here the whole press release in a pdf-file:

Domestic Foreign Exchange Market and Foreign Exchange Reserves 2013.pdf