Central Bank of Iceland revises currency baskets for trade-weighted exchange rate indices effective 1 January 2026

The Central Bank of Iceland has updated the currency weights in the baskets used to calculate its broad and narrow merchandise-, services- and trade-weighted exchange rate indices, using Iceland’s external trade data for 2024. The revised baskets will apply from 1 January 2026. No currencies change in the narrow merchandise (A), narrow services (C) and narrow trade (E) baskets. In the broad merchandise (B), broad services (D) and broad trade (F) baskets, the South Korean won is removed and the Turkish lira and Israeli shekel are added. Between years, the Chinese yuan and US dollar gain weight in the merchandise trade baskets while the euro’s weight declines, whereas in the services trade baskets the euro’s weight rises significantly and the Danish krone and pound sterling weights fall. These shifts carry through to the trade baskets, where the Chinese yuan and US dollar increase the most and the Danish krone decreases the most. The Bank reviews the baskets annually based on the prior year’s external trade, with currency selection based on a three-year average of each country’s share in Iceland’s goods and services trade, and the updated baskets will remain in use until the next annual review.