The Icelandic krona continued its downward slide yesterday, hitting 220.2 points in the weighted average of foreign currency index. The currency closed on Monday at 212 points. The currency weakened by 3.72 percent yesterday and 4.63 percent so far this week. Read the full story

PRESS RELEASE FROM THE CENTRAL BANK OF ICELAND:

According to the Rules on Foreign Exchange, no. 1130/2008, the Rules must be reviewed no later than March 1, 2009. After considering the necessary preconditions for lifting the capital controls, the Central Bank of Iceland has decided that these have not been sufficiently established.

The next review of the Rules on Foreign Exchange will occur no later than September 1, 2009, as is stated in the Act on Foreign Exchange, no. 87/1992, with subsequent amendments. The Central Bank of Iceland regularly assesses the effectiveness of the controls as part of its overall monetary policy and is formulating a strategy for their gradual, systematic removal. An assessment of the fulfilment of requirements for capital account liberalisation is also one of the subjects of consultation during the current IMF 1st Review Mission.

Gylfi Magnusson, Icelandic Minister of Commerce believes the time may have come to negotiate with foreigners clamouring to cash in their Icelandic krona Glacier Bonds for foreign currency, and instead offer sections of the foreign assets of Icelandic banks and pension funds. Read the full story

The Central Bank of Iceland (CBI) has still not needed to use any of the International Monetary Fund (IMF) loan to the country to stabilise the rate of the Icelandic krona, visir.is reports. Read the full story

Geir H. Haarde, the Icelandic Prime Minister, said that hope was rekindled yesterday when the Icelandic krona was traded on the international market for the first time since the banking collapse in early October, according to MBL.is. Read the full story

The Central Bank of Iceland yesterday confirmed that the Icelandic krona will begin to be traded again on the interbank market today, MBL.is reports.

The Bank’s statement said that the move will encourage a level of normalcy in the value of the krona, as the value of the currency will be determined by the market in the future and not by the sale price of Central Bank daily currency auctions, as has been the case recently.

The shift in the means of trading the krona does not, however, mean that restrictions on its use and trade have yet been abolished.

Editorial comment from IceNews:

The Icelandic krona began its “managed refloat” on Friday – and celebrated on Monday with a spectacular belly flop, gasping for air and struggling not to drown. It is only fair to point out, however, that yesterday saw a marked levelling-out, with only slight changes in both directions.

Meanwhile, also on Monday, a thousand people celebrated the 90th anniversary of Icelandic nationhood by demonstrating against the incumbent government and central bank board on the beautiful Arnarholl hill, right outside the Central Bank of Iceland. Iceland gained total home rule 90 years ago, but only gained total independence from Denmark in 1944.

After the rally, nearly a hundred of the protesters went into the central bank itself to have a little chat with governor David Oddsson; but riot police happened to be manning reception at the time. Read the full story

Both the Central Bank of Iceland and the Ministry of Trade are willing to change the recently-implemented laws on currency exchange so that they will no longer hinder direct foreign investment in Icelandic companies. The rules were implemented in a new law which was endorsed by the Minister of Trade, RUV.is reports. Read the full story

The Central Bank of Iceland has published questions and answers about the recent changes in the Foreign Exchange Act of 1992 and the Bank’s new Rules on Foreign Exchange. Read the full story

PRESS RELEASE FROM THE CENTRAL BANK OF ICELAND:

The Central Bank of Iceland guidelines from early October on temporary modifications in currency outflow have been revoked. The guidelines were adopted in the wake of the failure of three commercial banks and the ensuing market disturbances. Read the full story