The Central Bank of Iceland published its review of the foreign exchange market, exchange rate developments and international reserves in 2025, reporting modest overall appreciation of the króna and the Bank’s largest foreign currency purchases since 2017. Net purchases totalled ISK 68bn (EUR 473m), and international reserves stood at ISK 968bn, or 20% of GDP, at year-end. The króna appreciated by 0.7% over 2025, with moves varying by currency amid global market turmoil, weakening against the euro but strengthening significantly against the US dollar. Interbank foreign exchange market turnover rose year on year, exchange rate fluctuations increased versus the prior year but remained limited in an international context, and the regular purchase programme ran from April through December. The interest rate differential with abroad and the stock of foreign-owned Icelandic Government bonds were broadly unchanged at year-end; pension funds bought less foreign currency than in prior years, forward position-taking in the króna increased during 2025, and the Treasury’s EUR 750m eurobond issuance coincided with narrower spreads on foreign bonds issued by the Treasury and commercial banks.
Central Bank of Iceland 2026-01-22
Central Bank of Iceland publishes 2025 foreign exchange market report with ISK 68bn purchases and reserves of ISK 968bn
The Central Bank of Iceland's 2025 review highlights a modest appreciation of the króna and significant foreign currency purchases totaling ISK 68 billion (EUR 473 million), with international reserves at ISK 968 billion, or 20% of GDP. The króna's value fluctuated, appreciating by 0.7% overall, with increased interbank market turnover and limited exchange rate fluctuations amid global market turmoil.