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Foreign Currency Auction June 16

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Foreign Currency Auction June 16

Money - Icelandic Króna

Photo: Páll Kjartansson

As part of the government’s plan to lift capital controls in Iceland, the country’s Central Bank will hold a foreign currency auction on June 16. The bank will purchase krónur defined as offshore krónur in exchange for cash payment in foreign currency. The auction will run from 10 am through 2 pm on June 16.

Offshore krónur amount to ISK 319 billion (USD 2.55 billion, EUR 2.28 billion), RÚV reports. Simply put, they are owned by foreigners or by Icelanders abroad, and, due to capital controls, implemented following the financial crisis, their owners have not been able to exchange them for foreign currency and take the amounts out of the country. Had they been allowed to do so, that would have resulted in a sharp fall in the value of the króna compared with other currencies, since the mounts are substantial.

A parliamentary bill introduced by Finance Minister Bjarni Benediktsson last weekend, regarding offshore krónur, makes it possible for authorities to hold this auction.

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