Inter-Bank Market on Foreign Currency Takes a Jump Skip to content

Inter-Bank Market on Foreign Currency Takes a Jump

The inter-bank market on foreign currency was unexpectedly kick started yesterday and it is still quite lively. The jump had a positive influence on the exchange rate of the Icelandic króna, which has appreciated by 0.5 percent today.

Copyright: Icelandic Photo Agency.

The ISK also appreciated yesterday and has in fact been in a phase of appreciation for the past weeks. The exchange rate of the euro was at ISK 172.5 at noon today and has not been lower since mid-last year, reports.

The exchange rate index has dropped to 227 and has also not been lower since mid-2009.

The turnover in the inter-bank market was around EUR 1 million (USD 908,000) yesterday and it seems as if it will be even higher today.

Jón Bjarki Bentsson at the Íslandsbanki analysis department said it is very positive that there is life in the inter-bank market again.

“A date of maturity on government bonds is coming up next week and then foreign investors have the opportunity to exchange around four billion of interest payments to foreign currency,” Bentsson said.

“The fact that the banks are putting foreign currency into the inter-bank market shows that they are not concerned about this possible outflow of foreign currency,” Bentsson added.

Bentsson stated there are indications that the banks have “filled their tanks” of foreign currency in the past weeks to meet the outflow of interest payments to foreign owners of government bonds.

Now they believe the can tap off a bit as the activity on the inter-bank market shows.

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