CBI stops selling currency to support króna

04.05.2021 - 11:22
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 Mynd: Unsplash
Balance has been achieved on the currency exchange market, the Central Bank of Iceland states, and it has therefore decided to stop selling currency reserves to bolster the exchange rate.

A statement from the CBI says the Bank has sold 453 million euro since September last year—which is the equivalent of 71.2 billion krónur. The króna exchange rate has strengthened again now and stability has increased on the currency exchange market, meaning there is no longer a need for regular currency sales, the Bank has concluded. 

The CBI started selling part of its euro reserve to bolster the króna in direct response to the coronavirus crisis. By last autumn the króna exchange rate had “weakened significantly due to the significant contraction of export earnings and financial movements, and price determination on the currency market was uneconomic,” a statement from the CBI says. 

The Central Bank’s brighter currency exchange outlook does not mean the national economy has already recovered from the pandemic, however. The 12-month inflation rate was 4.6 percent in April, has been above the target rate for four months in a row, and is at its highest since February 2013. 

The government presented what it hopes will be the final COVID-19 financial support package for companies and individuals on Friday. 

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Alexander Elliott
Project manager