Changes in exchange rate listing
According to the Act on the Central Bank of Iceland, the Bank shall quote the exchange rate of the Icelandic króna against major foreign currencies. This rate shall be used as the reference rate for official agreements, court cases, and other contracts between parties when another reference exchange rate is not specified. The Central Bank’s exchange rate listing does not stipulate a rate at which individuals and businesses conduct transactions with financial institutions, nor does it indicate how the exchange rate of the króna versus foreign currencies develops within a given day. The Bank’s exchange rate listing is solely a reference indicating the position of the foreign exchange market at a specific time on the day in question.
The Bank’s daily exchange rate listing is based on the average mid-rate derived from market makers’ bids on one euro (expressed in ISK per EUR) between 10:45 hrs. and 11:00 hrs. The EURISK exchange rate and the exchange rate of all other currencies versus the euro are then used to calculate the exchange rate of those currencies versus the króna.
Since 2006, the Central Bank’s exchange rate listing has been in two parts. The first part is the exchange rate of the króna versus major currencies and special drawing rights (assigned currency code: XDR) at the International Monetary Fund (IMF). This has been termed the official reference exchange rate, and the Bank has listed the selling rate, and the buying rate, and the mid-rate, which lies at the centre of the range between the buying and selling rates. On the other hand, the Bank has listed the mid-rate of other currencies even though they do not fall into the official reference exchange rate category in the sense of the Act on the Central Bank of Iceland. The Bank began listing the mid-rates of these currencies when it changed its methods for calculating exchange rate indices in December 2006.
From 1 April 2020 onwards, the Bank will publish only the mid-rate of all currencies included in its listing, and this mid-rate will be the official reference exchange rate. Publication of the buying and selling rates will be discontinued. This is consistent with the practice of central banks in comparison countries.
Further information can be obtained from Gerdur Isberg, Deputy Director, Treasury and Market Operations, Central Bank of Iceland, at tel: +354 569-9600.
Press release no. 21/2019
9 October 2019