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Central Bank of Iceland Boosting Euro Reserves

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Central Bank of Iceland Boosting Euro Reserves

Már Guðmundsson

Photo: Geir Ólafsson.

The Central Bank of Iceland is buying millions of euro every week to increase its foreign currency reserves.

The Central Bank has made the decision to regularly buy euros for the equivalent of nearly half a billion krónur a week until the end of September, RÚV reports.

The Bank has been buying about EUR 9 million a week so far this year and last year it bought about ISK 40 billion worth of the currency.

Central Bank Director Már Guðmundsson says that now inflation is below the Central Bank’s target level and the exchange rate of the Icelandic króna is not too low, it is a good time to bolster reserves. He says more foreign currency in the coffers is more important at this stage than reducing interest rates. “This is similar to what we did in 2011 and 2012, although then the amounts were lower,” he said.

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